Commerce Department Rescinds Disparate-Impact and Affirmative Action Rules Under Title VI

It completely removes 15 CFR 8.4(b)(6), which previously required funding recipients to take affirmative action to overcome the effects of prior discrimination or conditions that limited participation. The department also deleted 15 CFR 8.4(c)(2), which had extended disparate-impact liability to a recipient's employment practices even when the primary objective of the federal funding was not to provide employment. Federal funding recipients will no longer face Department of Commerce investigations, enforcement actions, or liability based on unintentional disparate impacts. Moving forward, the department will exclusively pursue Title VI claims involving intentional discrimination. This regulatory shift relieves organizations from conducting preemptive impact analyses or engaging in racial balancing to shield themselves from legal liability under the previous framework. Funding recipients are not required to adopt any new compliance obligations. Instead, the elimination of these provisions decreases the regulatory burden and standardizes enforcement between the department and private plaintiffs, who are already restricted by Supreme Court precedent to pursuing only intentional discrimination claims. The rule universally applies to all programs and activities receiving Federal financial assistance from the Department of Commerce. This covers state governments, local governments, and private sector entities that voluntarily receive federal grants, loans, property, personnel, or contractual assistance. Additionally, a companion administrative update removes the "Canal Zone" from the definition of the "United States" across 15 CFR Parts 8 and 20, updating geographic definitions to reflect that the Panama Canal Zone is no longer under U.S. jurisdiction.