Commerce Rescinds Title VI Disparate-Impact Regulations

Content

ACTION:

Final rule.

SUMMARY:

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

DATES:

The rule is effective April 16, 2026.

FOR FURTHER INFORMATION CONTACT:

Daniel Sweeney, Senior Counsel, Office of the General Counsel, at (202) 482-1395.

SUPPLEMENTARY INFORMATION:

I. Executive Summary

The Department is revising and rescinding portions of its regulations promulgated pursuant to Title VI, 42 U.S.C. 2000d-1,
to more closely align its regulations to the language that Congress enacted in Title VI prohibiting intentionally discriminatory
conduct, see 42 U.S.C. 2000d. The Department is cross-referencing and incorporating the reasoning of the Department of Justice (DOJ) final
rule published in the
Federal Register
on December 10, 2025. 90 FR 57141. There are serious statutory and constitutional concerns with the legality of the Department's
Title VI regulations, which go beyond intentional discrimination to additionally prohibit conduct having an unintentional
disparate impact. This rule accordingly rescinds those portions of the regulations that prohibit conduct having a disparate
impact, which are in considerable tension with both Title VI and the Constitution and do not serve the public interest.

The rule's revisions also conform to Executive Order 14281, “ Restoring Equality of Opportunity and Meritocracy ” (Apr. 28, 2025; 90 FR 17537). That Order states that “[i]t is the policy of the United States to eliminate the use of disparate-impact
liability in all contexts to the maximum degree possible to avoid violating the Constitution, Federal civil rights laws, and
basic American ideals.” Id. at 17537. Although the Department would take this action independent of Executive Order 14281, the Order supports this action.

This rule makes clear that (i) the Department's Title VI regulations do not prohibit conduct or activities that have a disparate
impact and instead prohibit only intentional discrimination, and (ii) the Department thus will not pursue Title VI disparate-impact
liability against its Federal-funding recipients.

II. Discussion

A. Statutory History of Title VI

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

B. Regulatory History of Title VI

The Department originally published these regulations in a final rule on July 5, 1973 (38 FR 17938). The rule was issued under
Section 602 of the Civil Rights Act of 1964 (42 U.S.C. 2000d-1). Its issuance was part of a coordinated effort among Federal
departments and agencies, based on recommendations from the Interagency Committee for Uniform Title VI Regulation Amendments,
to clarify and standardize the application of Title VI. Shortly thereafter, the Department published a correction notice on
September 4, 1973 (38 FR 23777), to fix minor typographical errors in the original publication.

In 2003, the Department added language defining “program or activity” and “program” to reflect the amendment of Title VI by
the Civil Rights Restoration Act of 1987, Public Law 100-259. 68 FR 51334; see 15 CFR 8.3(g). Thus, beyond the required updating of the phrases “program or activity” and “program” pursuant to the Civil
Rights Restoration Act, the Department has not substantively updated its Title VI regulations since 1973.

C. Relevant Supreme Court Decisions

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

In 2001, the Supreme Court, in Alexander v. Sandoval, reaffirmed that settled understanding. See 532 U.S. at 280 (“[I]t is . . . beyond dispute . . . that [Title VI] prohibits only intentional discrimination.”). In Sandoval, the Supreme Court held that private plaintiffs lacked a private right of action to enforce DOJ's “disparate-impact

regulations.” Id. at 285-87. Although the Supreme Court had previously found a private cause of action to enforce Title VI's bar on intentional
discrimination, id. at 279-80, that conclusion did not extend to enforcing DOJ's “disparate-impact regulations.” Id. at 285. As the Supreme Court explained, it is “clear” that “the disparate-impact regulations do not simply apply” the statutory
prohibition, as the regulations “forbid conduct that [Title VI] permits,” so it is equally “clear that the private right of
action to enforce [Title VI] does not include a private right to enforce these regulations.” Id. While the Supreme Court in Sandoval “assume[d]” without deciding that DOJ's disparate-impact regulations were valid, the Court explained that the then-current
version of the regulations were in “considerable tension” with the Supreme Court's Title VI precedents. Similarly, the regulations
did not “authoritatively” construe Title VI because the regulations “forbid conduct”—namely, policies that unintentionally
result in a disparate impact—that Title VI “permits.” Id. at 281-82, 284-85; see also id. at 286 n.6 (“[Title VI] permits the very behavior that the regulations forbid.”).

Finally, in 2024, the Supreme Court overruled Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). See Loper Bright Enters. v. Raimondo, 603 U.S. 369, 409-12 (2024). In reaching that result, the Supreme Court made clear that “statutes . . . have a single, best
meaning” that is “ `fixed at the time of enactment.' ” Id. at 400 (quoting Wis. Cent. Ltd. v. United States, 585 U.S. 274, 284 (2018)). Thus, Title VI's bar on discrimination can have only one meaning. And under Supreme Court precedent,
the single, best meaning of Title VI is that it “prohibits only intentional discrimination” and “permits” facially neutral
policies that result in disparate outcomes so long as there is no discriminatory intent. Sandoval, 532 U.S. at 280, 286 n.6.

D. Executive Order 14281

On April 23, 2025, the President issued Executive Order 14281. This Order restated the “bedrock principle of the United States
. . . that all citizens are treated equally under the law.” 90 FR at 17537. The Order explained that this “principle guarantees
equality of opportunity, not equal outcomes,” and “promises that people are treated as individuals, not components of a particular
race or group.” Id.

That Order also explained that disparate-impact liability “endangers this foundational principle.” Id. Disparate-impact liability, the Order reasoned, “all but requires individuals and businesses to consider race and engage in
racial balancing to avoid potentially crippling legal liability.” Id. As the Order explained, disparate-impact liability “not only undermines our national values but also runs contrary to equal
protection under the law and, therefore, violates our Constitution.” Id.

The Order relayed that because of these problems, “[i]t is the policy of the United States to eliminate the use of disparate-impact
liability in all contexts to the maximum degree possible to avoid violating the Constitution, Federal civil rights laws, and
basic American ideals.” Id. Accordingly, this rule revises the Department's currently existing Title VI regulations, consistent with the Order's policy
and purpose.

In any event, the Department would have independently initiated steps toward making these changes regardless of Executive
Order 14281. Even if Executive Order 14281 did not exist, in other words, the Department would have taken steps to adopt the
policy to eliminate the use of disparate-impact liability under Title VI. The Order states, and the Department firmly agrees,
that a “bedrock principle of the United States is that all citizens are treated equally under the law. This principle guarantees
equality of opportunity, not equal outcomes. It promises that people are treated as individuals, not components of a particular
race or group. It encourages meritocracy and a colorblind society,” not race-, color-, or national-origin-based favoritism.
90 FR at 17537. And adherence to this principle, including in the issuance of grants, “is essential to creating opportunity,
encouraging achievement, and sustaining the American Dream.” Id.

Imposing disparate-impact liability endangers these policy objectives. Disparate-impact liability also raises serious constitutional
concerns, is in considerable tension with the original public meaning of Title VI, creates confusion, increases the costs
of compliance, and does not serve the public interest. After considering the relevant issues and factors and weighing the
relevant considerations, the Department concludes that these reasons support eliminating disparate-impact liability from the
Department's Title VI regulations. In any event, the Department concludes that each reason is a separate and independent basis
for eliminating disparate-impact liability from the Department's Title VI regulations.

E. Need for Rulemaking

The Department's regulation at 15 CFR 8.4, entitled “Discrimination prohibited,” outlines the core prohibitions against discrimination
and includes several provisions that go beyond the statutory text and constitutional requirements by prohibiting facially
neutral policies that have a disparate impact. Specifically, § 8.4(a) establishes the general principle that no person in
the United States shall, on the ground of race, color, or national origin, be excluded from participation in, be denied the
benefits of, or otherwise be subjected to discrimination under any program to which the part applies. Section 8.4(b) enumerates
specific discriminatory acts that are prohibited. These include, among others, providing different services or benefits, subjecting
individuals to segregation or separate treatment, restricting the enjoyment of advantages or privileges afforded to others,
and using criteria or administrative methods that have the effect of discriminating. This section also prohibits recipients
from selecting sites or locations for facilities with the purpose or effect of excluding individuals on prohibited grounds.
Furthermore, § 8.4(b)(6) requires a recipient to take affirmative action to overcome the effects of prior discrimination.
Section 8.4(c) addresses employment practices. It establishes that where a primary objective of the Federal financial assistance
is to provide employment, a recipient is prohibited from discriminating in its employment practices. Even where providing
employment is not a primary objective, the rule specifies that the same prohibitions apply if a recipient's discriminatory
employment practices tend to exclude individuals from participation in or deny them the benefits of the federally assisted
program.

There are serious statutory and constitutional concerns with the legality of the Department's Title VI disparate-impact regulations.
The Department also has serious policy concerns with its current disparate-impact regulations, including that the disparate-impact
standard creates confusion, undermines public confidence in the nation's civil rights laws and the rule of law, and produces
burdensome litigation and compliance costs.

1. Serious Legal Concerns

In accordance with the reasoning of the DOJ final rule, this Department recognizes that there are serious statutory concerns
as to whether the

Title VI statute authorizes the disparate-impact provisions of the current regulations. As summarized above, the Supreme Court's Sandoval decision makes clear that Title VI prohibits “only intentional discrimination” and “permits” facially neutral policies that
result in disparate outcomes when there is no discriminatory intent. Sandoval, 532 U.S. at 280-81, 286 n.6. That is the “single, best meaning” of Title VI. Loper Bright, 603 U.S. at 400. Sandoval calls into serious doubt the legality of the Department's “disparate-impact regulations.” Sandoval, 532 U.S. at 281-82, 284-85 (noting that DOJ's substantially identical regulations were in “considerable tension” with the
Supreme Court's Title VI precedents); see also id. at 286 n.6 (“[Title VI] permits the very behavior that the regulations forbid.”). Although Sandoval resolved only the question of private enforceability, subsequent cases such as Loper Bright have made clear that the Department cannot extend Title VI beyond its original public meaning. See Loper Bright, 603 U.S. at 412-13 (holding that “courts must . . . ensur[e] that [an] agency acts within” its statutory authority). And even
in the absence of Supreme Court precedent, the Department would have concluded that the best reading of Title VI is that it
prohibits only intentional discrimination.

Title VI authorizes agencies to promulgate regulations “to effectuate” the statute's prohibition of intentional discrimination.
42 U.S.C. 2000d-1. The current regulations' extension of prohibited conduct to include conduct with an unintentional disparate
impact reaches a vastly broader scope than the statute itself. This scope is too broad to be considered a simple prophylactic
measure aimed at preventing intentional discrimination. See Sandoval, 532 U.S. at 286 n.6 (“[Title VI] permits the very behavior that the regulations forbid.”). Thus, the disparate-impact regulations
do not “effectuate” Title VI. 42 U.S.C. 2000d-1.

There are also serious concerns about whether the Department's Title VI regulations pass constitutional muster under the Equal
Protection Clause. As the Supreme Court recently held in SFFA, “the Equal Protection Clause . . . applies without regard to any differences of race, of color, or of nationality—it is universal
in its application” and the “guarantee of equal protection cannot mean one thing when applied to one individual and something
else when applied to a person of another color.” 600 U.S. at 206 (internal quotation marks omitted) (first quoting Yick Wo v. Hopkins, 118 U.S. 356, 369 (1886); and then quoting Bakke, 438 U.S. at 289-90 (Powell, J.)). Despite the promises of the Equal Protection Clause, a funding recipient's risk of disparate-impact
liability under the Department's regulations is triggered by unintentional disparate outcomes, which the recipient may not
even know about without investigation. To evaluate and avoid this risk, the funding recipient must incur investigatory costs,
such as conducting an impact analysis, and is coerced to proactively consider race, color, and national origin, and potentially
use it to change the unintended disparate outcomes. In short, disparate-impact liability encourages and, in some cases, requires
covered entities to engage in the intentional use of race and racial balancing to eliminate those disparate outcomes by treating
certain racial groups differently from others—the exact conduct the Equal Protection Clause forbids. See id. The serious constitutional concerns raised by these perverse incentives further confirm that the best reading of Title VI
is that it prohibits only intentional discrimination and does not authorize the Department to impose disparate-impact liability. See Edward J. DeBartolo Corp. v. Fla. Gulf Coast Bldg. & Constr. Trades Council, 485 U.S. 568, 575 (1988) (“[W]here an otherwise acceptable construction of a statute would raise serious constitutional problems,
the Court will construe the statute to avoid such problems unless such construction is plainly contrary to the intent of Congress.”
(citing NLRB v. Catholic Bishop of Chi., 440 U.S. 490, 499-501, 504 (1979))).

This encouraged or coerced use of race, color, or national origin violates the Equal Protection Clause unless it survives
review under the “daunting” strict-scrutiny standard. SFFA, 600 U.S. at 206; see also Free Speech Coal., Inc. v. Paxton, 145 S. Ct. 2291, 2310 (2025) (“Strict scrutiny—which requires a restriction to be the least restrictive means of achieving
a compelling governmental interest—is `the most demanding test known to constitutional law.'” (quoting City of Boerne v. Flores, 521 U.S. 507, 534 (1997))). The use of race, color, or national origin necessitated by the disparate-impact provisions runs
into serious issues with the requirement of narrow tailoring to achieve a compelling interest. SFFA, 600 U.S. at 206-07.

Similarly, the “affirmative action” provision authorizes and sometimes requires the intentional use of race without requiring
that this intentional use be narrowly tailored to serve a recognized compelling interest. Instead, it encourages intentional
racial balancing “to overcome the effects of” unintended racial disparities. 28 CFR 42.104(b)(6). Thus, for substantially
the same reasons as above, the “affirmative action” provision raises serious constitutional concerns.

As summarized above, there are serious statutory and constitutional concerns with the Department's disparate-impact regulations.
But even if the regulations were consistent with the statute, the Department finds that eliminating the potential constitutional
concerns addressed above would independently justify the amendment of the regulations. Cf. U.S. Tel. Ass'n v. FCC, 188 F.3d 521, 528 (D.C. Cir. 1999) (concluding it was not “arbitrary and capricious” to adopt a certain policy in order to
“avoid[ ] raising a non-trivial constitutional question”). And even if the regulations did not raise serious constitutional
concerns, the Department finds that eliminating the costs and confusion caused by the mismatch between the statute and the
disparate-impact regulations would independently justify the repeal of the regulations.

2. Serious Policy Concerns

The Department also has serious policy concerns with the Title VI regulations' imposition of disparate-impact liability. While
the Department expresses its policy concerns with disparate-impact liability independent of Executive Order 14281, that Order
sets forth many valid policy concerns with disparate-impact liability:

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

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

Additionally, in practice, and as explained above, disparate-impact liability leads covered entities to engage in racial balancing
even as the underlying Title VI statute forbids intentional racial discrimination. This tension tends to create confusion
and undermine public confidence in the nation's civil rights laws and in the rule of law itself, as the law seems to both
forbid and require the same conduct.

These problems are amplified by the arbitrary nature of the racial and ethnic categories typically used to measure disparate
effects, which, by virtue of their arbitrariness, typically lack a meaningful connection to a compelling interest. See, e.g., SFFA, 600 U.S. at 216-17 (explaining that the “[racial] categories” utilized by Harvard and University of North Carolina were “themselves
imprecise in many ways” and “the use of these opaque racial categories undermine[d], instead of promote[d], [their] goals”).

The Department has considered, among other views, the view that looking at disparate effects can sometimes be useful in uncovering
or deterring subtle discrimination or indifference to unnecessary and arbitrary barriers; the view that placing a focus on
disparate outcomes can help undo the impact of prior instances of intentional discrimination; the view that placing a focus
on disparate outcomes is critical for advancing the Department's goals of promoting economic development and creating conditions
that facilitate economic opportunities for all communities; the view that covered entities and affected individuals have already
structured their policies and conduct around the disparate-impact provisions at issue; the view that meeting certain racial
and/or ethnic thresholds carries benefits regarding experience, knowledge, empathy, and cooperation; and the view that the
elimination of disparate-impact provisions is a disruption to the status quo that places an unnecessary and inappropriate
focus on race and ethnicity. But all these alleged benefits are outweighed by the other issues and factors the Department
has considered.

The Department has also considered the alternative of trying to adopt a modified version of disparate-impact liability, for
example, by requiring covered entities to try to remedy disparate impacts and/or unintentional discrimination for only certain
types of cases regarding education, housing, or employment; or by requiring covered entities to consider disparate impacts
for special economic development and opportunity purposes. But any version of imposing liability for unintentional discrimination
is inconsistent with Title VI's original public meaning, and even a modified version of disparate-impact liability would not
sufficiently eliminate the Department's serious legal and policy concerns. The Department determines that any benefits from
adopting alternative versions of disparate-impact liability are outweighed by the Department's legal and policy concerns.
And even if possible, developing such a rule would not solve the confusion or rule-of-law concerns expressed above, nor reduce
the compliance and litigation costs that covered entities face. The Department believes that the better course is to avoid
the complexities and litigation associated with this alternative, which ultimately would leave some parts of the problems
unaddressed and others inadequately addressed.

The Department also considered the potential reliance interests of funding recipients and others on the disparate-impact regulations. Sandoval, however, cast serious doubt on the regulations more than 20 years ago. And Executive Order 14281 also directed all agencies
to “deprioritize enforcement of all statutes and regulations to the extent they include disparate-impact liability,” including
specifically the Department's Title VI disparate-impact regulations. 90 FR at 17538. The Department accordingly believes that
any reliance interests should be minimal and do not outweigh the Department's legal and other policy concerns. Further, each
of the Department's concerns, whether considered cumulatively or separately, outweighs any reliance interests.

The Department notes that Sandoval has also led to a divergence between Title VI enforcement by private plaintiffs and enforcement by Federal departments and
agencies. After Sandoval, private plaintiffs can enforce only Title VI's statutory prohibition on intentional discrimination, while the Department can
continue to pursue disparate-impact liability. Repealing the disparate-impact regulations would eliminate this incongruent
enforcement.

Overall, after considering the relevant issues and factors and weighing the relevant considerations, the Department finds
that, regardless of the legality of the Department's disparate-impact regulations, the above summarized policy concerns, when
viewed separately or cumulatively, independently justify the repeal of its disparate-impact regulations.

III. Regulatory Amendments

This rule's regulatory changes address the concerns regarding the statutory authority supporting the scope of these regulations
that the Supreme Court questioned in Sandoval and the other legal and policy concerns discussed above, harmonize the implementing regulations' scope with the original public
meaning of Title VI, promote consistent enforcement among private plaintiffs and Federal departments and agencies, and provide
much needed clarity to the courts and Federal funding recipients.

For the reasons summarized above, the Department amends the following provisions in its Title VI implementing regulation that
explain the particular types of “Discrimination prohibited,” located at 15 CFR 8.4.

A. Table Summarizing Amendments

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

Section	Remove	Add
8.4(b)(2)	Full text of paragraph: “(2) A recipient . . . or national origin.”	“[Removed and Reserved]”.
8.4(b)(3)	“or effect” from both places
8.4(b)(6)	Full text of paragraph (6), subparts (i) and (ii)
8.4(c)(1)	“(1)” from “(c) Employment practices. (1) Where a primary objective of the . . . .”

In revised, remove “(c) Employment practices, “Such recipients and other parties . . . , develop a written affirmative action
plan.” | |
| 8.4(c)(2) | Full text of paragraph: “(2) In regard to . . . of beneficiaries.” | |

B. Section-by-Section Analysis

Section 8.4(b)(2)

Section 8.4(b)(2) is the current regulation's general prohibition of unintentional disparate impact. This paragraph expands
prohibited conduct from purposeful discrimination to Federal funding recipients who “utilize criteria or methods of administration
which have the effect of subjecting individuals to discrimination.” Because this paragraph's only purpose is to extend the
scope of the regulation to unintentional disparate-impact discrimination, this rule deletes this paragraph and thus amends
the Department's Title VI implementing regulations to conform more closely to the scope of the original public meaning of
Title VI. The rule replaces paragraph (b)(2) with a placeholder to maintain the numbering accuracy of previous citations and
other references to parts of this section.

Section 8.4(b)(3)

Section 8.4(b)(3) addresses a Federal funding recipient's or applicant's selection of sites or locations of facilities. The
paragraph provides that a funding recipient may not make selections with the “purpose or effect” of discriminating, or “with
the purpose or effect of defeating or substantially impairing the accomplishment of the objectives of” Title VI or the Department's
implementing regulations. The paragraph's two references to “effect” extend its scope to unintentional disparate impacts.
This rule deletes both “or effect” references to conform paragraph (b)(3) more closely to the scope of the original public
meaning of Title VI.

Section 8.4(b)(6)

Section 8.4(b)(6) deals with “affirmative action.” Paragraph (b)(6)(ii) authorizes affirmative action in programs even in
the absence of a finding of prior discrimination in a program “to overcome the effects of conditions which resulted in limiting
participation by persons of a particular race, color or national origin.” This provision points not to intentional discrimination,
but rather to the unintentional “effects of conditions.” The provision consequently authorizes intentional racial classifications,
racial preferences, and other race-based actions without the supporting compelling interest and narrow tailoring that the
Equal Protection Clause demands. This section has long conflicted with the Equal Protection Clause.

Paragraph (b)(6)(i) requires that a recipient “take affirmative action to overcome the effects of prior discrimination” if in “administering a program”
the “recipient has previously discriminated.” This provision goes well beyond the Equal Protection Clause, which permits in
limited circumstances, but does not mandate, a government to take narrowly tailored action to remedy the effects of its identified
past discrimination. See, e.g., Bakke, 438 U.S. at 307 (Powell, J.). Moreover, even putting aside the mandatory language in the provision, this provision does not
require sufficient narrow tailoring to the particular past discrimination, but rather simply “affirmative action to overcome
the effects of prior discrimination.” This provision accordingly promotes potentially illegal race discrimination to the extent
there is a lack of narrow tailoring. Moreover, it problematically requires recipients to consider and use race preferences
when the recipient may not want to consider or use race preferences. This is contrary to the Department's goal of promoting
and defending a culture of nondiscrimination and is destructive of the public's understanding of, and faith in, the nation's
civil rights laws. This rule, therefore, deletes paragraph (b)(6).

Section 8.4(c)

Section 8.4(c) addresses prohibited discriminatory employment practices. Paragraph (c)(1) prohibits intentionally discriminatory
employment practices when a primary objective of the Federal financial assistance is to provide employment. Paragraph (c)(2)
extends the prohibition to employment practices of the recipient even when the financial assistance primary objective “is
not to provide employment” if discrimination in the non-funded employment practices “tends, on the ground of race, color,
or national origin, to exclude persons from participation in, to deny them the benefits of, or to subject them to discrimination
under the program.” This paragraph prohibits not only intentional discrimination but also conduct that “tends” to have a discriminatory
effect on a program without the primary objective of providing employment. Moreover, paragraph (c)(2)'s extension to employment
practices where the Federal funding's primary objective is not to provide employment conflicts with the statutory limitation
found in 42 U.S.C. 2000d-3. Section 2000d-3 states, “[n]othing contained in [Title VI] shall be construed to authorize action
under [Title VI] by any department or agency with respect to any employment practice of any employer, employment agency, or
labor organization except where a primary objective of the Federal financial assistance is to provide employment.” Id.; see also Johnson v. Transp. Agency, Santa Clara Cnty., 480 U.S. 616, 628 n.6 (1987) (citing the statutory limitation and noting Congress's intent that Title VI not “impinge” on
Title VII, which prohibits discriminatory employment practices). The rule deletes paragraph (c)(2) so that the regulation
more closely adheres to the original public meaning of Title VI. This rule amends the current text of paragraph (c)(1) to
make a conforming edit to remove affirmative action requirements in accordance with the reasoning of the DOJ final rule and
to implement a technical edit to reflect the removal of paragraph (c)(2).

C. Severability

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

IV. Classification

A. Administrative Procedure Act

Pursuant to 5 U.S.C. 553(a)(2), the provisions of the Administrative Procedure Act requiring notice of proposed rulemaking
and the opportunity for public participation are inapplicable to this rule because it relates to “agency management or personnel
or to public property, loans, grants, benefits, or contracts.”

Title VI concerns non-discrimination conditions on the receipt of Federal financial assistance, and more particularly to the
receipt of Federal “[g]rants and loans,” “property,” “personnel” and “[a]ny Federal agreement, arrangement, or other contract
which has as one of its purposes the provision of assistance.” 15 CFR 8.3(f); see also 15 CFR 8.5 (requiring funding recipient sign contractual assurance of compliance with Title VI); Cummings v. Premier Rehab Keller, P.L.L.C., 596 U.S. 212, 217-18 (2022) (observing that Congress enacted Title VI “[p]ursuant to its authority to `fix the terms on which
it shall disburse federal money' ” (internal citation omitted)). Cf. Education Programs or Activities Receiving or Benefitting from Federal Financial 82 FR 46655, 46655 (Oct. 6, 2017) (invoking the section 553(a)(2) exception to amend Title IX regulations to “promote consistency
in the enforcement of Title IX for [the Department of Agriculture] financial assistance recipients”); Preserving Community and Neighborhood Choice, 85 FR 47899 (Aug. 7, 2020) (invoking the exception to repeal Housing and Urban Development rule regarding Federal grantees); Participation by Minority Business Enterprise in Department of Transportation Programs, 53 FR 18285 (May 23, 1988) (invoking the exception to expand coverage of Department of Transportation regulation regarding
Federal Aviation Administration's airport financial assistance program); Nondiscrimination on the Basis of Handicap in Federally Assisted Programs—Suspension of Guidelines with Respect to Mass Transportation, 46 FR 40687 (Aug. 11, 1981) (invoking the exception to suspend Department of Justice guidelines regarding prohibiting disability
discrimination in transportation programs and activities receiving Federal financial assistance).

Indeed, invoking 5 U.S.C. 553(a)(2) is consistent with the Office for Management and Budget's (OMB) definition for “Federal
financial assistance” under 2 CFR 200.1, which defines “Federal financial assistance” with the same categories as the Administrative
Procedure Act's exception for rules “relating to agency management or personnel or to public property, loans, grants, benefits,
or contracts,” 5 U.S.C. 553(a)(2). With potentially limited exceptions not applicable to the Department, all the forms of
Federal financial assistance set forth under 2 CFR 200.1 that the Department administers would fall under the “public property,
loans, grants, benefits, or contracts” exception.

Thus, in accordance with the reasoning of the DOJ final rule, the Department issues this final rule without prior public notice
and comment or a delayed effective date under 5 U.S.C. 553(a)(2).

B. Executive Orders 12866 and 13563 (Regulatory Review)

This rulemaking is a “significant regulatory action” under section 3(f) of Executive Order 12866, 58 FR 51735, 51738 (Sep.
30, 1993). Accordingly, this rule has been submitted to the Office of Management and Budget (OMB) for review.

This regulation has been drafted and reviewed in accordance with Executive Order 12866 section 1(b), id. at 51735, and in accordance with Executive Order 13563 section 1(b), 76 FR 3821, 3821 (Jan. 18, 2011), which supplements and
reaffirms the principles of Executive Order 12866. These Executive Orders direct agencies to assess all costs and benefits
of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits.
58 FR at 51735; 76 FR at 3821. Executive Order 13563 also recognizes that some benefits and costs are difficult to quantify
and provides that, where appropriate and permitted by law, agencies may consider and discuss qualitatively values that are
difficult or impossible to quantify. Id.

As explained in the preamble, the regulatory modifications this rule makes are necessary to conform Department regulations
to Executive Order 14281, address serious legal concerns regarding the Department's Title VI regulation that the Supreme Court
raised in Sandoval, harmonize the implementing regulation's scope with the scope of conduct that Congress intended Title VI to prohibit, promote
consistency in enforcement among private plaintiffs and Federal departments and agencies, provide much needed clarity to courts
and Federal funding recipients and beneficiaries regarding the scope of the Department's Title VI regulations, and implement
the Department's general policy of minimizing unnecessary attention to individuals' racial and ethnic background(s).

Per USASpending data, the Department issued over 8,000 separate new financial assistance awards and obligated over $63 billion
over the past four fiscal years (FYs 22, 23, 24, and 25). In FY2023 alone, the Department issued over 2,000 separate new financial
assistance awards and obligated over $5.7 billion. The Department's Title VI-related active investigations regarding these
funds and their recipients were traditionally coordinated through and conducted with other federal agencies, including the
DOJ, due to the Department's External Civil Rights program being in its infancy and not having dedicated staff until recently.
As a result, the Department does not have information about active investigations during that timeframe. Additionally, the
Department does not track which of its investigations and compliance reviews involve solely allegations of disparate-impact
discrimination. For enforcement actions that relate to both intentional discrimination and conduct having an unintentional
disparate impact, the Department does not track and cannot reliably quantify the costs attributable to the varying disparate-impact
portions of enforcement actions. That the existence of a disparate impact is sometimes a factor that is considered in determining
whether discrimination is intentional further impedes monetizing costs and benefits. Therefore, the overall cost effect on
the Department is difficult to quantify. This deregulatory action should decrease the Department's enforcement costs, however.
It will also have the benefit, albeit difficult to quantify, of bringing the Department's regulations in line with the law.
The Department is also unable to quantify how funding recipients will respond to the regulatory changes, but the deregulatory
action should result in greater flexibility and lower compliance costs.

Although funding recipients may receive additional Federal funding from sources other than the Department, the Department
does not envision that this rule will appreciably increase administrative costs or compliance costs for funding recipients
who must also adhere to the regulations of another department or agency. This deregulatory action does not create any new
obligations for funding recipients. On the contrary, by eliminating disparate-impact liability from the regulation, it eliminates
a source of regulatory confusion, narrows the conduct prohibited, and thus lessens the costs of compliance and potential liability.
Moreover, recipients who receive funds for the same program or activity from more than one Federal entity already enter into
separate contractual assurances with each funding entity; such assurances already impose varying requirements that each Federal
funding source deems necessary.

Based on the analysis of the practical qualitative costs and benefits noted above, the Department believes that this rule
is consistent with the principles of Executive Orders 12866 and 13563, including the requirements that, to the extent permitted
by law, the Department adopt a regulation only upon a reasoned determination that its benefits justify its costs and choose
a regulatory approach that maximizes net benefits. See 58 FR at 51735; 76 FR at 3821.

C. Executive Order 14192 (Unleashing Prosperity Through Deregulation)

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

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

D. Executive Order 13132 (Federalism)

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

E. Regulatory Flexibility Act

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

F. Executive Order 12250

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

G. Unfunded Mandates Reform Act of 1993

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

H. Congressional Review Act

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

I. Paperwork Reduction Act

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

List of Subjects in 15 CFR Part 8

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

Dated: April 13, 2026. Paul Dabbar, Deputy Secretary of Commerce. Accordingly, for the reasons set forth above, part 8 of title 15 of the Code of Federal Regulations is amended as follows:

PART 8—NONDISCRIMINATION IN FEDERALLY ASSISTED PROGRAMS OF THE DEPARTMENT OF COMMERCE—EFFECTUATION OF TITLE VI OF THE CIVIL

RIGHTS ACT OF 1964

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

Authority:

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

1. Amend § 8.4 by revising paragraphs (b) and (c) to read as follows:

§ 8.4 Discrimination prohibited.

---

(b) Specific discriminatory acts prohibited. (1) A recipient of Federal financial assistance, or other party subject to this part, shall not participate, directly or through
contractual or other arrangements, in any act or course of conduct which, on the ground of race, color, or national origin:

(i) Denies to a person any service, financial aid, or other benefit provided under the program;

(ii) Provides any service, financial aid, or other benefit, to a person which is different, or is provided in a different
manner, from that provided to others under the program;

(iii) Subjects a person to segregation or separate or other discriminatory treatment in any matter related to his receipt
(or nonreceipt) of any such service, financial aid, property, or other benefit under the program.

(iv) Restricts a person in any way in the enjoyment of services, facilities, or any other advantage, privilege, property,
or benefit provided to others under the programs;

(v) Treats a person differently from others in determining whether he satisfies any admission, enrollment, quota, eligibility,
membership, or other requirement or condition which persons must meet in order to be provided any service, financial aid,
or other benefit provided under the program;

(vi) Denies a person an opportunity to participate in the program through the

provision of property or services or otherwise, or affords him an opportunity to do so which is different from that afforded
others under the program (including the opportunity to participate in the program as an employee but only to the extent set
forth in paragraph (c) of this section);

(vii) Denies a person the same opportunity or consideration given others to be selected or retained or otherwise to participate
as a contractor, subcontractor, or subgrantee;

(viii) Denies a person the opportunity to participate as a member of a planning or advisory body which is an integral part
of the program.

(2) [Reserved]

(3) In determining the site or location of facilities, a recipient or other party subject to this part may not make selections
with the purpose of excluding persons from, denying them the benefits of, or subjecting them to discrimination under any program
to which this part applies, on the grounds of race, color or national origin; or with the purpose of defeating or substantially
impairing the accomplishment of the objectives of the Act or this part.

(4) As used in this section, the services, financial aid, or other benefits provided under a program receiving Federal financial
assistance shall be deemed to include any service, financial aid, or other benefit provided or made available in or through
or utilizing a facility provided with the aid of Federal financial assistance.

(5) The enumeration of specific forms of prohibited discrimination in this paragraph and paragraph (c) of this section does
not limit the generality of the prohibition in paragraph (a) of this section.

(c) Employment practices. Where a primary objective of the Federal financial assistance to a program to which this part applies is to provide employment,
a recipient or other party subject to this part shall not, directly or through contractual or other arrangements, subject
a person to discrimination on the ground of race, color, or national origin in its employment practices under such program
(including recruitment or recruitment advertising, hiring, firing, upgrading, promotion, demotion, transfer, layoff, termination,
rates of pay or other forms of compensation or benefits, selection for training or apprenticeship, use of facilities, and
treatment of employees). The requirements applicable to construction employment under any such program shall be in addition
to those specified in or pursuant to Part III of Executive Order 11246 or any Executive order which supersedes it. Federal
financial assistance to programs under laws funded or administered by the Department that has as a primary objective the providing
of employment include those set forth in appendix A II of this part.

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

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