Department of Justice Eliminates Title VI Disparate Impact Regulations

On December 9, 2025, the Department of Justice issued a final rule (“Final Rule”) that rescinds the Department’s existing disparate impact liability regulations under Title VI of the Civil Rights Act of 1964, which prohibited federal funding recipients from “utiliz[ing] criteria or methods . . . which have the effect of subjecting individuals to discrimination,”[1] regardless of whether there was any discriminatory intent. Title VI is a federal law that “prohibits discrimination on the basis of race, color, and national origin in programs and activities receiving Federal financial assistance.” Disparate impact is a theory of discrimination that is applied when an apparently neutral practice has a statistically significant adverse effect on a protected group. The effect of the Final Rule is to clarify “that the Department's Title VI regulations do not prohibit conduct or activities that have a disparate impact and prohibit only intentional discrimination, and the Department thus will not pursue Title VI disparate-impact liability against its Federal-funding recipients.” The Department implemented the Final Rule, which was done without notice and comment, to address perceived “serious statutory and constitutional concerns with the legality of the Department’s Title VI regulations that go beyond intentional discrimination by prohibiting conduct that has an unintentional disparate impact.” The Final Rule does not affect other federal disparate impact statutes and regulations, such as those that apply in the employment context under Title VII of the Civil Rights Act of 1964.

On April 23, 2025, as we previously discussed, President Trump issued an Executive Order that established a federal government policy of seeking to eliminate disparate impact liability for discrimination “in all contexts to the maximum degree possible,” and, among other things, directed the Attorney General to consider ways to “repeal or amend” disparate impact regulations under Title VI. The Final Rule extensively relies on that Executive Order, and states that it “would have independently initiated steps toward making these changes regardless of [the] Executive Order.” The Department stated this change is motivated by its desire to “restore true equality under the law by requiring proof of actual discrimination, rather than enforcing race- or sex-based quotas or assumptions.”

A.         Changes to Title VI Regulations

The Final Rule changes the Department’s existing Title VI regulations in several respects.  The Final Rule:

• Removes the existing rule at 28 C.F.R. 42.104(b)(2), which previously imposed Title VI liability on federal funding recipients who “utilize criteria or methods of administration which have the effect of subjecting individuals to discrimination.”
• Removes language in 28 C.F.R. 42.104(b)(3) governing a federal funding recipient’s selection of a location for its facilities to the extent such selection has the “effect” of discriminating.
• Removes the existing rule at 28 C.F.R. 42.104(b)(6), which required that a recipient of federal funding “must take affirmative action to overcome the effects of prior discrimination” if the funding recipient “has previously discriminated against persons on the ground of race, color, or national origin.”
• Removes the existing rule at 28 C.F.R. 42.104(c)(2), which extended the prohibition on employment practices that “tend[], 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” to all recipients of federal financial assistance.

B.         Notice and Comment

The Department issued the Final Rule without prior notice and public comment under the Administrative Procedure Act’s exception for rules “relating to agency management or personnel or to public property, loans, grants, benefits or contracts.”[2] The Department stated that this exception applies because “Title VI concerns non-discrimination conditions on the receipt of Federal financial assistance, [such as] 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.’”[3]

C.         Other Disparate Impact Prohibitions

The Final Rule does not affect the disparate impact provisions of other areas of federal law, including Title VII of the Civil Rights Act of 1964, which applies in the private sector employment context, as well as state and local law in certain jurisdictions. Although the Equal Employment Opportunity Commission has reportedly internally declined to pursue disparate impact investigations,[4] private sector employers may remain liable for Title VII disparate impact claims through private actions.

The Department’s rule change is consistent with the Trump Administration’s efforts to cease the enforcement of disparate impact theories of discrimination. Employers should be mindful that the rule change does not eliminate potential exposure to disparate impact claims, as the order has no immediate impact on existing disparate impact case law, and state and local governments are likely to continue to seek to pursue disparate impact claims. Employers should carefully monitor the changing landscape as we expect further developments in this area.

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