Treasury Eliminates Disparate-Impact Liability From Title VI Regulations

The Department of the Treasury adopted a final rule amending its Title VI regulations to eliminate potential disparate-impact liability.

In the final rule, the Treasury stated that the amendments align its regulations with the original public meaning of Title VI of the Civil Rights Act of 1964, which prohibits only intentional discrimination. The changes also implement Executive Order 14281, Restoring Equality of Opportunity and Meritocracy, which declares a policy of eliminating disparate-impact liability in all contexts to the maximum degree possible. The executive order also directs the Attorney General to initiate action to repeal or amend agencies' Title VI regulations to the extent they contemplate such liability.

The rule removes a provision that prohibited funding recipients from using criteria or methods of administration that have the effect of subjecting individuals to discrimination based on race, color, or national origin, regardless of intent. It also strikes references to "or effect" from a provision addressing the siting of facilities, limiting the prohibition to purposeful discrimination.

Additionally, the rule rescinds an "affirmative action" provision that authorized and in some circumstances required recipients to take race-conscious action to remedy unintentional disparities. The Treasury stated that the provision encouraged intentional racial balancing without requiring the narrow tailoring demanded by the Equal Protection Clause. The rule also deletes a provision that extended non-discrimination obligations to employment practices even when the primary objective of the funding was not employment, which the Treasury said exceeded statutory limitations.

The Treasury issued the rule without prior notice and comment, invoking the Administrative Procedure Act's exception for rules relating to federal grants, loans, and contracts. The amendments conform to parallel changes the Department of Justice made to its own Title VI regulations in December 2025.

The rule became effective August 3, 2026.