[Federal Register Volume 91, Number 164 (Wednesday, August 26, 2026)]
[Rules and Regulations]
[Pages 55008-55015]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2026-17366]
[[Page 55008]]
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NATIONAL FOUNDATION ON THE ARTS AND THE HUMANITIES
45 CFR Part 1110
RIN 3135-AA37; 3136-AA48; 3137-AA30
Rescinding Portions of the National Foundation on the Arts and
Humanities Title VI Regulations To Conform More Closely With the
Statutory Text and To Implement Executive Order 14281
AGENCY: National Endowment for the Arts, National Endowment for the
Humanities, Institute of Museum and Library Services, National
Foundation on the Arts and the Humanities.
ACTION: Final rule.
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SUMMARY: This rule amends the National Foundation on the Arts and the
Humanities' (the Foundation) regulations implementing Title VI of the
Civil Rights Act of 1964 (Title VI) to eliminate disparate-impact
liability. These amendments align the conduct prohibited by the
Foundation's regulations with Title VI text, avoid constitutional
concerns, reduce compliance costs, and serve the public interest. In
addition, these revisions are consistent with Executive Order 14281.
DATES: These regulations are effective August 26, 2026.
FOR FURTHER INFORMATION CONTACT: Daniel Fishman, Deputy General
Counsel, National Endowment for the Arts, 400 7th St. SW, Washington,
DC 20506, Telephone: 202-682-5418.
SUPPLEMENTARY INFORMATION:
I. Background
The Foundation operates under the National Foundation on the Arts
and the Humanities Act of 1965, as amended (20 U.S.C. 951 et seq.), and
consists of the National Endowment for the Arts (NEA), the National
Endowment for the Humanities (NEH), the Institute of Museum and Library
Services (IMLS), and the Federal Council on the Arts and the Humanities
(FCAH). The NEA, NEH, IMLS, and FCAH are collectively referred to as
the ``Foundation's constituent agencies'' or the ``constituent
agencies.''
II. Executive Summary
This rule rescinds portions of the Foundation's regulations
promulgated pursuant to Title VI, 42 U.S.C. 2000d-1, to more closely
align its regulations with the language that Congress enacted in Title
VI prohibiting intentionally discriminatory conduct, see 42 U.S.C.
2000d. There are serious statutory and constitutional concerns with the
legality of provisions in the Foundation's Title VI regulations that go
beyond intentional discrimination by prohibiting conduct that has an
unintentional disparate impact. This rule accordingly rescinds those
portions of the regulations, which are in considerable tension with
both the statute and the Constitution and do not sufficiently serve the
public interest. First, this rule rescinds the full text of 45 CFR
1110.3(b)(2), which currently prohibits the utilization of ``criteria
or methods of administration which have the effect of subjecting
individuals to discrimination because of their race, color, or national
origin.'' Second, this rule removes the two uses of the phrase ``or
effect'' from 45 CFR 1110.3(b)(3). Third, this rule rescinds the full
text of 45 CFR 1110.3(b)(6). Fourth, this rule rescinds the full text
of 45 CFR 1110.3(c)(3), which addresses employment practices of Federal
funding recipients. Fifth, this rule rescinds the full text of the
illustrative applications and examples under 45 CFR 1110.5(e), (f), and
(g), in order to conform the illustrative applications to the foregoing
revisions.
The rule's revisions also conform to Executive Order 14281,
Restoring Equality of Opportunity and Meritocracy, 90 FR 17537 (Apr.
23, 2025). 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.
The practical impact of this rule's modifications will be to
clarify for the constituent agencies' recipients of Federal funding
that the revised Title VI regulations do not prohibit conduct or
activities that have a disparate impact and prohibit only intentional
discrimination, and thus that the Foundation's constituent agencies
will not pursue Title VI disparate-impact liability against their
funding recipients.
III. 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, specifically 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 provide any Federal department or agency with
authority to prohibit unintentional disparate impact. And despite ample
opportunities, Congress has enacted no subsequent amendments to Title
VI to impose disparate-impact liability.
B. Regulatory History of Title VI
Pursuant to Executive Order 12250, ``[t]he Attorney General shall
coordinate the implementation and enforcement by Executive agencies of
. . . Title VI.'' 45 FR 72995, 72995 (Nov. 2, 1980). Accordingly, the
Department of Justice (DOJ) acts as the lead Federal agency responsible
for defining the nature and scope of Title VI's prohibition of
discrimination on the basis of race, color, and national origin in
programs or activities receiving Federal financial assistance. The
Order directs DOJ to, among other things, ``develop standards and
procedures for taking enforcement actions and for conducting
investigations and compliance reviews.'' Id. Further, as part of this
responsibility, the Order provides that other Federal agencies'
regulations implementing Title VI are also subject to the Attorney
General's approval. Id. at 72996.
The initial set of model regulations for Title VI were issued by
the then-Department of Health, Education, and Welfare on December 4,
1964, which included only one reference to the ``effect of'' conduct in
the ``discrimination prohibited'' provision of the rule. See 29 FR
16298, 16299 (Dec. 4, 1964) (codified at 45 CFR 80.3(b)(2)). In 1973,
the Foundation promulgated its regulations under Title VI. 38 FR 17991
(July 5, 1973). In 1997, the Foundation issued a technical amendment to
incorporate IMLS into the regulation, after IMLS was established as a
subdivision of the Foundation under the Museum and Library Services Act
of 1996. 62 FR 66826 (Dec. 22, 1997). In 2003, the Foundation added
language regarding ``program or activity'' to reflect the amendment of
Title VI by the Civil Rights Restoration Act of 1987. 68 FR 51384 (Aug.
26, 2003). Thus, apart from the technical update of adding IMLS,
[[Page 55009]]
and the required updating of the phrase ``program or activity''
pursuant to the Civil Rights Restoration Act, the Foundation has not
substantively updated its Title VI regulations since 1973--over 50
years ago.
C. Relevant Supreme Court Decisions
The Supreme Court has made clear 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 concluded 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. 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. Though 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. Although the Supreme Court in Sandoval
``assume[d],'' without deciding, that DOJ's disparate-impact
regulations were valid, the Court explained that the regulations are in
``considerable tension'' with the Supreme Court's Title VI precedents.
Similarly, the regulations do 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.'').
In 2023, the Court emphasized that ``the equal protection clause
requires equality of treatment before the law for all persons without
regard to race or color.'' SFFA, 600 U.S. at 205 (cleaned up). In
reviewing the admissions policies of certain higher education
institutions, the Court explained that the Constitution requires
``eliminating all'' racial discrimination. Id. at 206. To that end, it
held that ``[a]ny exception to the Constitution's demand for equal
protection must survive a daunting two-step examination known in our
cases as `strict scrutiny,' '' which requires that racial
classifications `` `further compelling government interests' '' and be
`` `narrowly tailored'--meaning `necessary'--to achieve [such]
interest[s].'' Id. at 206-07. Moreover, the Court explained that its
``precedents have identified only two compelling interests that permit
resort to race-based government action,'' only one of which is relevant
in general government administration: ``remediating specific,
identified instances of past discrimination that violated the
Constitution or a statute.'' Id. at 207. 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 when there
is no discriminatory intent. Sandoval, 532 U.S. at 280, 286 n.6.
D. Executive Order 14281
On April 23, 2025, President Trump 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.
The 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 disparate-impact liability's
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. The Order directed the Attorney
General to, among other things, ``initiate appropriate action to repeal
or amend the implementing regulations for Title VI of the Civil Rights
Act of 1964 for all agencies to the extent they contemplate disparate-
impact liability.'' Id. On December 10, 2025, DOJ amended its Title VI
regulations to eliminate disparate-impact liability. 90 FR 57141 (Dec.
10, 2025). The Foundation agrees with DOJ's rationale provided in its
final rule, and accordingly, this rule also revises the Foundation's
Title VI regulations to effectuate the Order's policy and purpose.
In any event, the Foundation would have independently initiated
steps toward modifying its Title VI regulation in alignment with
Executive Order 14281. Even if the Order did not exist, in other words,
the Foundation would have taken steps to adopt the policy to eliminate
the use of disparate-impact liability under Title VI. The Order states,
and the Foundation firmly agrees, that a ``bedrock principle of the
United States is that all citizens are treated equally under the law,''
a principle that ``encourages meritocracy and a colorblind society,''
not race-, color-, or national-origin-based favoritism. 90 FR
[[Page 55010]]
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 single,
best 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 Foundation concludes that these reasons together
support eliminating disparate-impact liability from the Foundation's
Title VI regulations.
E. Need for Rulemaking
The Foundation's regulations at 45 CFR part 1110, entitled
``Nondiscrimination in Federally Assisted Programs,'' contain several
provisions that prohibit conduct or activities causing unintentional
disparate impact, without a statutory or constitutional basis for doing
so. And in some instances, the regulations encourage or even require
unlawful discrimination labeled as ``reasonable action.'' Section
1110.3(b)(2) is the current regulation's general disparate-impact
prohibition, which states that a ``recipient . . . may not . . .
utilize criteria or methods of administration which have the effect of
subjecting individuals to discrimination because of their race, color,
or national origin.'' 45 CFR 1110.3(b)(2). Beyond that general
prohibition, section 1110.3(b)(3) addresses a Federal funding
recipient's selection of the site or location of facilities and
includes two references to ``effect'' that extend the scope of
prohibited conduct to include conduct with unintentional disparate
impact. Id. 1110.3(b)(3). Section 1110.3(b)(6) concerns the use of
``reasonable action,'' and provides that funding recipients may (and
sometimes must) use race, color, or national origin to overcome
unintentional disparate ``consequences,'' but does not expressly
specify that the funding recipient must narrowly tailor such use to
serve a compelling governmental interest, as is required to satisfy
strict scrutiny. Id. 1110.3(b)(6). Finally, section 1110.3(c)(3)
addresses prohibited discriminatory employment practices and extends
beyond intentional discrimination to prohibiting conduct that ``tends''
to have a discriminatory effect. Id. 42.104(c)(2).
There are serious statutory and constitutional concerns with the
Foundation's Title VI disparate-impact regulations. There are also
serious policy concerns because the current regulations create
confusion, undermine public confidence in the Nation's civil rights
laws and the rule of law, and produce burdensome litigation and
compliance costs.
1. Serious Legal Concerns
There are serious statutory concerns as to whether Title VI
authorizes the disparate-impact provisions of the current regulations.
As the Supreme Court has made clear, 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, 286 n.6. That is the ``single, best
meaning'' of Title VI. Loper Bright, 603 U.S. at 400. As summarized
above, Sandoval calls into serious doubt the legality of the
Foundation's ``disparate-impact regulations.'' 532 U.S. at 281-82, 284-
85 (noting that DOJ's regulations, which the Foundation's regulations
mirror, are 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 Foundation cannot extend Title VI
beyond its single, best meaning. See 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 Foundation would have concluded that the best reading of
Title VI is that it prohibits only intentional discrimination. Id.
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 range of conduct than the statute itself. This
range 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 Foundation'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 Foundation's regulations is
triggered by unintentional disparate outcomes, which the recipient may
not even have known 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 such
analysis 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. This serious constitutional concern
further confirms that the best reading of Title VI is that it prohibits
only intentional discrimination and does not authorize Federal agencies
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 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
[[Page 55011]]
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 Foundation's ``reasonable 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 remove or overcome the consequences of''
unintended racial disparities. 45 CFR 1110.3(b)(6). Thus, for
substantially the same reasons as above, the Foundation's ``reasonable
action'' provision raises serious constitutional concerns.
For the reasons summarized above, there are serious statutory and
constitutional concerns with the Foundation's disparate-impact
regulations. But even if the regulations were legal, eliminating the
potential constitutional concerns addressed above would independently
justify amending 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 to ``avoid[ ] raising a non-
trivial constitutional question''). And even if the regulations did not
raise serious constitutional concerns, eliminating the costs and
confusion caused by the mismatch between the statute and the disparate-
impact regulations would independently justify repealing the disparate
impact regulations.
2. Serious Policy Concerns
There are also serious policy concerns with the Title VI
regulations' imposition of disparate-impact liability. While policy
concerns with disparate-impact liability exist independent of Executive
Order 14281, that Order sets forth many valid policy concerns with
disparate-impact liability. As noted in section 1 of the Order, ``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. 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
Title VI forbids intentional racial discrimination. This tension tends
to create confusion, undermine public confidence in the Nation's civil
rights laws, and undermine public confidence 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'' at issue were
``themselves imprecise in many ways'' and ``the use of these opaque
racial categories undermine[d], instead of promote[d], [their]
goals''). This lack of clarity undermines the law's ability to
encourage nondiscrimination. These policy concerns independently
justify repealing disparate-impact regulations to eliminate confusion,
remove the incentive for covered entities to engage in racial
balancing, and maintain clarity and public confidence in the Nation's
civil rights laws.
The Foundation's constituent agencies have considered the view that
examining disparate effects can sometimes be useful in uncovering or
deterring subtle intentional discrimination or intentional indifference
to unnecessary and arbitrary barriers. But any alleged benefits are
outweighed by the other issues and factors described above that the
constituent agencies have considered. And in any event, the concern is
mitigated by the fact that eliminating disparate-impact liability does
not preclude the use of data on disparate outcomes to help prove
intentional discrimination. Each of the Foundation's constituent
agencies and private litigants may rely on such data as a potential
indicator of intentional discrimination. This use of a statistical
disparity to help establish, as an evidentiary matter, liability for
intentional discrimination materially differs from using such a
disparity to impose liability for an unintentional disparate impact.
The Foundation's constituent agencies considered adopting a version
of this regulation that limits disparate-impact liability to claims
involving certain categories of grantees, including grantees with a
prior finding of noncompliance in operating an agency-funded program.
The Foundation's constituent agencies decline to adopt that approach.
Verifying such claims would be administratively untenable because it
would require access to records the Foundation's constituent agencies
do not retain for a sufficiently long period due to compliance with
mandatory record retention regulations (or else require unreasonably
long and costly document-retention policies), or would require the
Foundation's constituent agencies to obtain records from other agencies
to which they do not have regular access. The modification would also
add another layer of administrative decision-making, creating
additional work and delay between deserving claimants and the
disposition of Title VI claims. In any event, that additional layer
would not cure the absence of statutory authorization permitting
Federal agencies to impose disparate impact liability.
Additionally, the constituent agencies have considered the
potential reliance interests of funding recipients and others on the
disparate-impact regulations. However, the Sandoval decision cast
serious doubt on the continuing viability of these regulations more
than 25 years ago. Since Sandoval, enforcement of Title VI disparate-
impact regulations has been minimal and sporadic. Also, Executive Order
14281 directed all Federal agencies to ``deprioritize enforcement of
all statutes and regulations to the extent they include disparate-
impact liability.'' 90 FR at 17538. Accordingly, the constituent
agencies' position is that any reliance interests should be minimal and
do not outweigh legal and other policy concerns. Further, each
constituent agency's concerns, whether considered cumulatively or
separately, outweigh any reliance interests.
The Foundation's constituent agencies note 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 Federal departments and agencies have
[[Page 55012]]
continued to pursue disparate-impact liability. Repealing the
disparate-impact regulations eliminates this incongruent enforcement.
Overall, after considering the relevant issues and factors and
weighing the relevant considerations, the Foundation's constituent
agencies have determined that, regardless of the legality of the
Foundation's disparate-impact regulations, the above summarized policy
concerns, whether viewed separately or cumulatively, independently
justify the repeal of its disparate-impact regulations.
IV. Regulatory Amendments
This rule's regulatory changes address the concerns regarding the
statutory authority that the Supreme Court questioned in Sandoval and
the other legal and policy concerns discussed above; harmonize the
implementing regulations' scope with the conduct that Congress intended
Title VI to prohibit; promote consistent enforcement of Title VI among
private plaintiffs and Federal departments and agencies; and provide
much needed clarity to the courts and Federal funding recipients and
beneficiaries.
For the reasons summarized above, the Foundation's constituent
agencies amend the following provisions in its Title VI implementing
regulations that explain particular types of discrimination prohibited,
located in 45 CFR part 1110.
A. Table Summarizing Amendments
The table below indicates the exact wording changes made by this
rule. For each section indicated in the left column, the action
described in the middle column is taken with respect to the text
identified in the right column.
------------------------------------------------------------------------
Section Action Details
------------------------------------------------------------------------
1110.3(b)(2).................... Remove............ Remove full text
of Sec.
1110.3(b)(2).
1110.3(b)(3).................... Remove............ Remove ``or
effect'' from
both places.
1110.3(b)(6).................... Remove............ Remove full text
of paragraph (6).
1110.3(c)(3).................... Remove............ Remove full text
of paragraph (3).
1110.5(e)....................... Remove............ Remove full text
of paragraph (e).
1110.5(f)....................... Remove............ Remove full text
of paragraph (f).
1110.5(g)....................... Remove............ Remove full text
of paragraph (g).
------------------------------------------------------------------------
B. Section-by-Section Analysis
Section 1110.3(b)(2)
Section 1110.3(b)(2) is the current regulation's general
prohibition of conduct with unintentional disparate impact. It imposes
liability on Federal funding recipients who ``utilize criteria or
methods of administration which have the effect of subjecting
individuals to discrimination.'' Because the only purpose of section
1110.3(b)(2) is to extend the scope of Title VI to reach conduct giving
rise to unintentional disparate impact, this rule deletes this
paragraph in its entirety. Thus, it amends the Foundation's Title VI
implementing regulations to conform to the scope of coverage Congress
intended when it enacted Title VI and to address the legal and policy
concerns described in this document. This 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 1110.3(b)(3)
Section 1110.3(b)(3) addresses a Federal funding recipient's or
applicant's selection of the site or location of facilities. It
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 Foundation's implementing
regulations. The paragraph's two references to ``effect'' extend its
scope to conduct causing unintentional disparate impacts. This rule
deletes both uses of ``or effect'' to conform paragraph (b)(3) more
closely to the scope of coverage Congress intended when it enacted
Title VI and to address the legal and policy concerns described in this
document.
Section 1110.3(b)(6)
Section 1110.3(b)(6) pertains to ``reasonable action'' to overcome
the consequences of certain conduct. The paragraph authorizes such
action even in the absence of a finding of prior discrimination in a
program ``to remove or overcome the consequences of practices or
impediments which have restricted the availability of, or participation
in, the program or activity receiving Federal financial assistance, on
the grounds of race, color, or national origin.'' This provision points
not to intentional discrimination, but rather to the unintentional
``consequences of practices or impediments.'' It accordingly encourages
intentional racial classifications, racial preferences, and other race-
based actions without specifying the compelling governmental interest
and narrow tailoring that the Equal Protection Clause demands. This
section has long been unlawful under an Equal Protection Clause
analysis.
Paragraph (b)(6) also states that a recipient ``has an obligation
to take reasonable action to remove or overcome the consequences of the
prior discriminatory practice or usage'' where ``previous
discriminatory practice or usage tends, on the grounds of race, color,
or national origin, to exclude individuals from participation in, to
deny them the benefits of, or to subject them to discrimination.'' This
provision goes beyond the Equal Protection Clause, which, in limited
circumstances permits, 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.). Even
placing aside the mandatory language, this provision does not expressly
require narrow tailoring to counter particular past discrimination, but
rather ``reasonable action to remove or overcome the consequences of
the prior discriminatory practice or usage.'' Accordingly, this
provision promotes potentially illegal race, color, and national origin
discrimination. Moreover, in some instances, it may even coerce
recipients to consider and use racial preferences when the recipient
does not want to. This is contrary to the goal of promoting and
defending a culture of nondiscrimination and is destructive to the
public's understanding of and faith in the Nation's civil rights laws.
Therefore, this rule removes paragraph (b)(6).
Section 1110.3(c)(3)
Section 1110.3(c)(3) addresses prohibited discriminatory employment
practices. Paragraph (c)(1) prohibits intentionally discriminatory
employment practices in a program for which a primary objective of the
Federal financial assistance that program receives is to provide
employment. Paragraph (c)(3) extends the prohibition on discrimination
to employment practices of the funding recipient even
[[Page 55013]]
when ``a primary objective of the Federal financial assistance is not
to provide employment'' if discrimination in the nonfunded ``employment
practices of the recipient or other persons subject to the regulation
tends, on the grounds of race, color, or national origin, to exclude
individuals from participation in, to deny them the benefits of, or to
subject them to discrimination under any program to which this
regulation applies.'' This paragraph prohibits not only intentional
discrimination but rather extends the prohibition to conduct that
``tends'' to have a discriminatory effect.
Moreover, paragraph (c)(3)'s extension to employment practices for
which the Federal funding's primary objective is not to provide
employment conflicts with the statutory limitation found in 42 U.S.C.
2000d-3. That section states that ``[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.'' 42 U.S.C. 2000d-3; see also Johnson v. Transp. Agency,
Santa Clara Cnty., 480 U.S. 616, 627-28 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). This rule deletes paragraph (c)(3) to amend the regulation
so that it more closely adheres to the scope of conduct Congress
prohibited under Title VI and to address the legal and policy concerns
described in this document.
Section 1110.5(e), (f), (g)
The ``Illustrative applications'' under section 1110.5 consist of
examples that illustrate the application of the regulation to some of
the activities for which Federal financial assistance is provided by
the Foundation's constituent agencies. This rule deletes paragraph (e)
because it is an illustrative example of section 1110.3(b)(2), which is
being deleted for the reasons described above. Likewise, paragraphs (f)
and (g) illustrate the application of section 1110.3(b)(6), which is
also being deleted.
V. Severability
The Foundation's constituent agencies' position is that each of
this rule's amendments serves a vital, related, but distinct purpose.
The constituent agencies also confirm that each of the amendments is
intended to operate independently of one other and that the potential
invalidity of one amendment does not affect the validity of other
amendments. The constituent agencies adopt any of the amendments
independent and regardless of the invalidity of a separate amendment.
VI. Regulatory Certifications
Administrative Procedure Act
The Foundation's constituent agencies issue this final rule without
prior public notice and comment or a delayed effective date pursuant to
the exception in the Administrative Procedure Act (APA) for rules
``relating to agency management or personnel or to public property,
loans, grants, benefits, or contracts.'' 5 U.S.C. 553(a)(2).
Title VI concerns nondiscrimination conditions on the receipt of
Federal financial assistance, and more particularly on 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.'' 45 CFR 1110.13(f); see also
id. 1110.4 (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
Assistance, 82 FR 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 a 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 a Department of Transportation regulation regarding the
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 DOJ guidelines prohibiting disability discrimination in
transportation programs and activities receiving Federal financial
assistance).
Invoking 5 U.S.C. 553(a)(2) is consistent with the definition for
Federal financial assistance provided by the U.S. Office for Management
and Budget (OMB) in 2 CFR 200.1, which defines Federal financial
assistance with the same categories as the APA'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 Foundation's
constituent agencies, all forms of Federal financial assistance set
forth under 2 CFR 200.1 that the constituent agencies administer fall
under the ``public property, loans, grants, benefits, or contracts''
exception. Thus, the Foundation's constituent agencies issue this final
rule without prior public notice and comment or a delayed effective
date under 5 U.S.C. 553(a)(2).
Executive Orders 12866 and 13563 (Regulatory Review)
The Foundation's constituent agencies have determined that this
rulemaking is a ``significant regulatory action'' under section 3(f) of
Executive Order 12866, 58 FR 51735, 51738 (Sep. 30, 1993), but not an
``economically significant'' action under section 3(f)(1). Accordingly,
this rule has been submitted to OMB for review.
This regulation has been drafted and reviewed in accordance with
section 1(b) of Executive Order 12866, id. at 51735, and section 1(b)
of Executive Order 13563, 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
qualitative values that are difficult or impossible to quantify. Id.
As explained in the preamble, the regulatory modifications in this
rule conform the Foundation's regulations to Executive Order 14281;
address serious concerns regarding Title VI disparate-impact
regulations that the Supreme Court raised in Sandoval; harmonize the
implementing regulations' 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; and provide
much needed clarity to courts and
[[Page 55014]]
Federal funding recipients and beneficiaries regarding the scope of the
Foundation's Title VI regulations. Indeed, with respect to section
1110.3(c) of the Foundation's Title VI regulations, the changes made to
this rule are necessary to bring the regulations into compliance with
42 U.S.C. 2000d-3. In short, this rule is necessary to conform the
Foundation's current regulations to existing statutory law, as
interpreted by the Supreme Court.
The costs and benefits of this rule are difficult to quantify due
to data limitations. Although the figures below do not represent the
monetary impact of the rule, the NEA issued approximately 14,950
separate awards totaling approximately $942 million from fiscal year
2020 through fiscal year 2024, and the NEH issued approximately 4,517
separate awards totaling approximately $920 million during this same
period. IMLS issued approximately 2,346 separate awards totaling
approximately $1.03 billion from fiscal year 2022 through fiscal year
2025. During the period from fiscal year 2020 through fiscal year 2024,
the Foundation's constituent agencies did not conduct any Title VI-
related active investigations or compliance reviews regarding these
funds and their recipients that centered on disparate impact alone. For
enforcement actions that relate to both intentional discrimination and
conduct having an unintentional disparate impact, the constituent
agencies do not track and cannot reliably quantify the costs
attributable to the varying disparate-impact portions of enforcement
actions. Also, the existence of a disparate impact is sometimes a
factor that may be considered in determining whether discrimination was
intentional; this further impedes monetizing costs and benefits
specific to disparate-impact enforcement. Therefore, the overall cost
effect on the constituent agencies is difficult to quantify, although
this rule should decrease the constituent agencies' enforcement costs.
This rule also should have the benefit of bringing the constituent
agencies' conduct in line with the law, which is also difficult to
quantify. Similarly, the constituent agencies are unable to quantify
how funding recipients will respond to the regulatory changes. But this
deregulatory action should result in greater flexibility and lower
compliance costs for recipients.
The Foundation's constituent agencies recognize that a funding
recipient may receive Federal funds from sources other than, and in
addition to, the constituent agencies. Regardless, the constituent
agencies do not envision that this rule will appreciably increase
administrative costs or compliance costs for funding recipients that
also must adhere to the regulations of another department or agency.
This deregulatory action does not create any new obligations for
constituent agencies' funding recipients. On the contrary, eliminating
disparate-impact liability from the regulations eliminates a source of
regulatory confusion, narrows and makes more specific the conduct
prohibited, and thus lessens the costs of compliance and potential
liability. Moreover, recipients that receive funds for the same program
or activity from more than one Federal entity already enter into
separate contractual assurances with each funding entity. See, e.g., 45
CFR 1110.4 (the Foundation), 10 CFR 1040.4 (Department of Energy); 45
CFR 605.5 (National Science Foundation); 45 CFR 80.4 (Department of
Health and Human Services).
Such assurances already impose varying requirements that each
Federal funding source deems necessary. Thus, funding recipients will
continue to be held to the most stringent contractual assurance and
regulation. And in any event, the Foundation notes that other agencies
are currently amending their regulations to align with the changes made
in this rule, so the Foundation anticipates that there will be little,
if any, disparity in Federal requirements regarding disparate-impact
liability going forward.
Based on the analysis of the practical qualitative costs and
benefits noted above, the Foundation's position is that this rule is
consistent with the principles of Executive Orders 12866 and 13563,
including the requirements that, to the extent permitted by law, an
agency 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.
Executive Order 14192 (Unleashing Prosperity Through Deregulation)
Executive Order 14192 requires an agency, unless prohibited by law,
to identify at least ten existing regulations to be repealed when the
agency publicly 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.'' Id. By revising the Foundation's current Title VI
regulations, which extend prohibited conduct to include unintentional
disparate impacts and thus expand the scope of those regulations to a
vastly broader range of conduct than the statute prohibits, this rule
eliminates unnecessary regulation. Accordingly, the Foundation's
constituent agencies consider this rule to be a deregulatory action
under Executive Order 14192.
Executive Order 14294 (Fighting Overcriminalization in Federal
Regulations)
Executive Order 14294 requires agencies promulgating regulations
with criminal regulatory offenses potentially subject to criminal
enforcement to ``explicitly describe the conduct subject to criminal
enforcement, the authorizing statutes, and the mens rea standard
applicable to'' each element of those offenses. 90 FR 20363, 20363 (May
9, 2025). This rule does not impose a criminal regulatory penalty and
is thus exempt from Executive Order 14294's requirements.
Executive Order 13132 (Federalism)
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 Foundation's
constituent agencies 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 any new obligations. Rather, 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 constituent agencies have
determined that these amendments do not have sufficient federalism
implications to warrant the preparation of a federalism summary impact
statement.
Executive Order 12988 (Civil Justice Reform)
This rule meets the applicable standards set forth in sections 3(a)
and (b)(2) of Executive Order 12988 to specify provisions in clear
language. See 61 FR 4729, 4731-32 (Feb. 5, 1996). Pursuant to section
3(b)(1)(I) of the Executive Order, id. at 4731, nothing in this or any
previous rule (or in any administrative policy, directive, ruling,
notice, guideline, guidance, or writing) directly relating to the
program that is the subject of this rule is intended to
[[Page 55015]]
create any legal or procedural rights enforceable against the United
States.
Executive Order 12250
Pursuant to Executive Order 12250, 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.'' 45 FR at 72995. DOJ has reviewed and approved this
rule.
Regulatory Flexibility Act
This rule does not require a regulatory flexibility analysis under
the Regulatory Flexibility Act (RFA), 5 U.S.C. 603, 604, because, for
the reasons described above, no notice of proposed rulemaking is
required under 5 U.S.C. 553. 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 Foundation's constituent
agencies, in accordance with 5 U.S.C. 605(b), have reviewed these
regulations and certify that the rule's changes will not have a
significant economic impact on a substantial number of small entities
because these regulatory changes do not impose any new substantive
obligations on Federal funding recipients. Rather, the rule amends and
clarifies existing regulations that are required by Title VI. Also, the
rule brings constituent agencies into compliance with the Equal
Protection Clause and harmonizes the scope of the current regulations
to conform to the scope of Title VI, which does not prohibit conduct
giving rise to unintentional disparate impact. All Federal funding
recipients have been and will continue to be bound by existing
standards that will remain in place after this rule is effective.
Unfunded Mandates Reform Act of 1995
The Unfunded Mandates Reform Act of 1995 (UMRA), 2 U.S.C. 1501 et
seq., requires agencies to prepare several analytic statements before
proposing any rule that may result in annual expenditures of $100
million by State, local, or Tribal governments, or the private sector.
2 U.S.C. 1532(a). However, UMRA also excludes from its 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.''
2 U.S.C. 1503(2). Accordingly, this rule is not subject to the
provisions of UMRA.
Congressional Review Act
The Office of Information and Regulatory Affairs has determined
that this rule is not a ``major rule'' as defined by the Congressional
Review Act, 5 U.S.C. 804(2).
Paperwork Reduction Act of 1995
Pursuant to the Paperwork Reduction Act, 44 U.S.C. 3501 et seq.,
agencies must consider whether a rule will create additional burdens
related to recordkeeping, paperwork, or information collection. This
rule will not impose additional reporting or recordkeeping requirements
under the Act.
List of Subjects for 45 CFR Part 1110
Administrative practice and procedure, Civil rights, Equal
employment opportunity, Grant programs.
Accordingly, for the reasons set forth above, the NEA (for itself
and on behalf of FCAH, for which NEA provides legal counsel), NEH, and
IMLS amend part 1110 of title 45 of the Code of Federal Regulations as
follows:
PART 1110--NONDISCRIMINATION IN FEDERALLY ASSISTED PROGRAMS
0
1. The authority citation for part 1110 is revised to read as follows:
Authority: 42 U.S.C. 2000d, 2000d-1, 2000d-7; E.O. 12250, 45 FR
72995; E.O. 14281, 90 FR 17537.
0
2. Amend Sec. 1110.3 by:
0
a. Removing and reserving paragraph (b)(2);
0
b. Revising paragraph (b)(3); and
0
c. Removing paragraphs (b)(6) and (c)(3).
The revision reads as follows:
Sec. 1110.3 Discrimination prohibited.
* * * * *
(b) * * *
(3) In determining the site or location of facilities, a recipient
or applicant may not make selections with the purpose of excluding
individuals from, denying them the benefits of, or subjecting them to
discrimination under any program to which this regulation 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 regulation.
* * * * *
Sec. 1110.5 [Amended]
0
3. Amend Sec. 1110.5 by removing paragraphs (e), (f), and (g).
Mary Anne Carter,
Chairman, National Endowment for the Arts.
Michael McDonald,
Senior Deputy Chairman, National Endowment for the Humanities.
Lisa K. Solomson,
Senior Official Performing the Duties of the Director, Institute of
Museum and Library Services.
[FR Doc. 2026-17366 Filed 8-25-26; 8:45 am]
BILLING CODE 7537-01-P