Alert
Alert
By Jeffrey P. Metzler, Sarah Rowan, Jean F. Kuei, Julia E. Judish
12.17.25
On December 9, 2025, U.S. DOJ issued a rule (the “Rule”) rescinding a portion of its Title VI regulations to eliminate disparate-impact liability, with immediate effect. Title VI prohibits discrimination based on race, color, or national origin in any program or activity receiving federal financial assistance. The Title VI regulations identify specific discriminatory actions that are prohibited. 28 CFR 42.104. These regulations prohibited practices that had the effect of subjecting individuals to discrimination because of their race, color, or national origin, even in the absence of discriminatory intent. In other words, under the prior regulations, DOJ could claim that facially neutral programs or policies were discriminatory if they had a disproportionate and adverse impact on protected groups compared to individuals of a different race, color, or national origin. A program facing allegations of disparate impact based on outcomes data could defend against liability by proffering a substantial legitimate justification for the practice. A finding of disparate- impact liability would then be made only by identifying an equally effective alternative practice that would result in a lesser disproportionate effect on the individuals in the protected class, or by establishing that the purportedly legitimate practice was a pretext for intentional discrimination. The preamble to the Rule states that although it does not preclude the use of data showing statistical disparities to prove intentional discrimination, using statistical data in such a way “materially differs from using it to impose liability for an unintentional disparate impact.”
The Rule rolls back disparate-impact prohibitions by:
The Rule conforms to President Trump’s April 28, 2025, Executive Order titled “Restoring Equality of Opportunity and Meritocracy,” which provides that “it 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.” That Executive Order instructed the U.S. Attorney General to “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.” The Rule does just that.
The Rule was issued without notice and comment rulemaking. DOJ stated that it did so pursuant to the Administrative Procedure Act’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). It explained that Title VI concerns non-discrimination conditions on the receipt of federal financial assistance, and particularly to 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.” 28 CFR 42.102(c).
As previewed in our previous client alert, the Rule is in tension with U.S. Attorney General Pam Bondi’s July 29, 2025, memorandum for all federal agencies titled “Guidance for Recipients of Federal Funding Regarding Unlawful Discrimination” (the “Guidance”). According to the Guidance, “[u]nlawful proxies occur when a federally funded entity intentionally uses ostensibly neutral criteria that function as substitutes for explicit consideration of race, sex, or other protected characteristics.” The Guidance asserted that facially neutral criteria can be discriminatory when (i) “[t]hey are selected because they correlate with, replicate, or are used as substitutes for protected characteristics” or (ii) “[t]hey are implemented with the intent to advantage or disadvantage individuals based on protected characteristics.” However, the Rule’s elimination of a prohibition based on the effect of “facially neutral” practices by recipients of federal funding will make it challenging to establish Title VI violations based on such practices unless it can be established that the challenged practice is undertaken for the purpose of discriminating on the basis of race or other protected characteristics. Given these regulatory and policy pronouncements, close monitoring of forthcoming agency actions and court decisions will be essential for assessing compliance obligations in this evolving area.