Treasury Ditches Disparate-Impact Rules for Title VI Clarity
Published Date: 8/3/2026
Rule
Summary
By this rule, the Department of the Treasury ("Department") amends its regulations implementing Title VI of the Civil Rights Act of 1964 ("Title VI") to eliminate disparate-impact liability. 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 the Executive order, Restoring Equality of Opportunity and Meritocracy.
Analyzed Economic Effects
5 provisions identified: 3 benefits, 1 costs, 1 mixed.
Treasury Drops Disparate-Impact Liability
Effective August 3, 2026, the Department of the Treasury rescinds portions of its Title VI regulations to eliminate disparate-impact liability. The Department states it will not pursue Title VI disparate-impact claims against its Federal-funding recipients and replaces or removes text such as 31 CFR 22.4(b)(2), 22.4(b)(6), and the phrase "or effect" in 22.4(b)(3).
Rules Now Cover Only Intentional Discrimination
The Treasury amended its Title VI rules to make clear they prohibit only intentional discrimination and not conduct that merely has a disparate impact. The revised text removes references to actions taken "with the effect" of discrimination so enforcement will focus on purposeful acts.
Affirmative-Action Language Removed
The rule removes paragraph 31 CFR 22.4(b)(6), which authorized affirmative action to "remove or overcome the consequences" of prior practices, and deletes one affirmative-action sentence in 31 CFR 22.4(c)(1). These removals eliminate regulatory text that the Department said could require or encourage race-based measures.
Employment Rule Narrowed to Jobs Programs
Treasury revised 31 CFR 22.4(c) so employment-practice nondiscrimination applies where a primary objective of the Federal financial assistance is to provide employment. The rule deletes the prior paragraph extending Title VI employment restrictions to recipients whose federal aid did not have employment as a primary objective.
Expected Lower Compliance and Enforcement Costs
The Department states this deregulatory action will decrease its enforcement costs and is anticipated to give Federal-funding recipients greater flexibility and lower compliance and investigatory costs. The Department did not provide quantified dollar estimates but cites reduced compliance burden as an intended effect.
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