Proposed Rule2026-16228
HUD's Implementation of the Fair Housing Act's Disparate Impact Standard; Amendments to HUD's Title VI Regulations
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Published
August 10, 2026
Issuing agencies
Housing and Urban Development Department
Abstract
HUD published a notice of proposed rulemaking in January of 2026 that proposed to remove HUD's disparate-impact regulations and leave interpretation of disparate-impact liability under the Fair Housing Act to the courts. This supplemental notice of proposed rulemaking continues HUD's efforts to remove or revise regulations that prohibit conduct having a disparate impact without evidence of discriminatory intent. Through this rule, HUD is proposing to remove provisions in HUD's Title VI implementing regulations that impose disparate-impact liability on recipients of HUD Federal financial assistance. If finalized, this rule would improve consistency within HUD's own regulations and between HUD's regulations and the Title VI regulations recently revised by the Department of Justice (DOJ). This rule reopens the public comment period of HUD's January 2026 proposed rule on disparate-impact liability; HUD will only consider comments on topics related to this supplemental notice of proposed rulemaking during the reopened comment period.
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<title>Federal Register, Volume 91 Issue 152 (Monday, August 10, 2026)</title>
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[Federal Register Volume 91, Number 152 (Monday, August 10, 2026)]
[Proposed Rules]
[Pages 51416-51421]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-16228]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Part 1
[Docket No. FR-6540-P-02]
RIN 2529-AB09
HUD's Implementation of the Fair Housing Act's Disparate Impact
Standard; Amendments to HUD's Title VI Regulations
AGENCY: Office of the Assistant Secretary for Fair Housing and Equal
Opportunity, Department of Housing and Urban Development (HUD).
ACTION: Supplemental notice of proposed rulemaking.
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SUMMARY: HUD published a notice of proposed rulemaking in January of
2026 that proposed to remove HUD's disparate-impact regulations and
leave interpretation of disparate-impact liability under the Fair
Housing Act to the courts. This supplemental notice of proposed
rulemaking continues HUD's efforts to remove or revise regulations that
prohibit conduct having a disparate impact without evidence of
discriminatory intent. Through this rule, HUD is proposing to remove
provisions in HUD's Title VI implementing regulations that impose
disparate-impact liability on recipients of HUD Federal financial
assistance. If finalized, this rule would improve consistency within
HUD's own regulations and between HUD's regulations and the Title VI
regulations recently revised by the Department of Justice (DOJ). This
rule reopens the public comment period of HUD's January 2026 proposed
rule on disparate-impact liability; HUD will only consider comments on
topics related to this supplemental notice of proposed rulemaking
during the reopened comment period.
DATES: Comments are due by October 9, 2026.
ADDRESSES: Interested persons are invited to submit comments regarding
this supplemental notice of proposed rulemaking. All submissions must
refer to the docket number and title. There are two methods for
submitting public comments.
1. Electronic Submission of Comments. Interested persons may submit
comments electronically through the Federal eRulemaking Portal at
<a href="https://www.regulations.gov">https://www.regulations.gov</a>.
2. Submission of Comments by Mail. Comments may be submitted by
mail to the Regulations Division, Office of General Counsel, Department
of Housing and Urban Development, 451 7th Street SW, Room 10276,
Washington, DC 20410-0500.
In accordance with 5 U.S.C. 553(b)(4), a summary of this
supplemental proposal may be found at <a href="http://www.regulations.gov">www.regulations.gov</a>.
FOR FURTHER INFORMATION CONTACT: Scott Knittle, Principal Deputy
General Counsel, U.S. Department of Housing and Urban Development, 451
7th Street SW, Washington, DC 20410; telephone number (202) 402-2244
(this is not a toll-free number). HUD welcomes and is prepared to
receive calls from individuals who are deaf or hard of hearing, as well
as individuals with speech or communication disabilities. To learn more
about how to make an accessible telephone call, please visit <a href="https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs">https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs</a>.
SUPPLEMENTARY INFORMATION:
I. Background
On January 14, 2026, HUD issued a notice of proposed rulemaking,
HUD's Implementation of the Fair Housing Act's Disparate Impact
Standard, 91 FR 1475 (HUD's 2026 proposed rule). HUD's 2026 proposed
rule would remove HUD's disparate-impact regulations at 24 CFR part 100
subpart G, consisting of Sec. 100.500, and make a corresponding
technical revision to 24 CFR 100.5(b).
HUD's regulations at 24 CFR part 1 (HUD's Title VI regulations)
implement nondiscrimination requirements under Title VI of the Civil
Rights Act of 1964. Public Law 88-352, 78 Stat. 252 (Title VI). Section
601 of Title VI prohibits any person in the United States, on the
ground of race, color, or national origin, from being excluded from
participation in, being denied the benefits of, or being subjected to
discrimination under any program or activity receiving Federal
financial assistance. 42 U.S.C. 2000d. Section 602 of Title VI directs
Federal departments and agencies that provide Federal financial
assistance to any program or activity, by way of grant, loan, or
contract other than a contract of insurance or guaranty, to implement
section 601 by, among other things, issuing rules and regulations. 42
U.S.C. 2000d-1. HUD provides Federal financial assistance of the types
described by Title VI; therefore, Title VI's nondiscrimination
prohibition applies to certain programs and activities for which
Federal financial assistance is administered by HUD. See 24 CFR 1.1-
1.3.
HUD's Title VI regulations implement the prohibition against
discrimination on the basis of race, color, or national origin, which
includes exclusion from participation in, denial of benefits of, or
discrimination under any HUD program or activity to which 24 CFR part 1
applies. 24 CFR 1.4(a); see also 24 CFR 1.3. HUD's Title VI regulations
were last substantively amended in 1973, consistent with uniform
amendments adopted by Federal agencies at that time. 38 FR 17949 (July
5, 1973). HUD and DOJ collaborated on this rulemaking, and both
agencies reviewed public comments provided in response to HUD's
proposed rule for that rulemaking. Id. Since then, HUD has made minor
or technical amendments to sections in 24 CFR part 1 through other
rulemakings to remove outdated regulations and reduce regulatory
burden,\1\ to update nomenclature in response to statutory changes,\2\
and to remove obsolete provisions on nondiscrimination hearing
procedures and instead cross-reference updated and
[[Page 51417]]
consolidated procedures in 24 CFR part 180.\3\
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\1\ 83 FR 26360, June 7, 2018 (amended language in 24 CFR 1.3 to
remove outdated cross references to appendix A to 24 CFR part 1); 60
FR 47260, September 11, 1995 (removed appendix A to 24 CFR part 1).
\2\ 50 FR 9268, March 7, 1985 (amended language in 24 CFR 1.5 to
change the phrase ``Health, Education and Welfare'' to ``Health and
Human Services'').
\3\ 61 FR 52216, October 4, 1996 (amended 24 CFR 1.9 and
redesignated then-existing 1.12 as now-existing 1.10).
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On December 10, 2025, DOJ issued a final rule, Rescinding Portions
of Department of Justice Title VI Regulations To Conform More Closely
With the Statutory Text and To Implement Executive Order 14281, 90 FR
57141 (DOJ's 2025 final rule), which amended DOJ's Title VI regulations
to remove disparate-impact liability consistent with changes directed
by Executive Order 14281. See id. at 57141-45. HUD agrees with and
adopts the rationale provided in DOJ's rule. HUD's Title VI regulations
that are the subject of this proposed rulemaking closely follow DOJ's
rule.
II. Justification for Rulemaking
HUD's regulation at 24 CFR 1.4, entitled ``Discrimination
Prohibited,'' contains several provisions that go beyond the statute
and the Constitution by prohibiting conduct or activities causing an
unintentional disparate impact. And in some instances, these provisions
may encourage or even require unlawful discrimination labeled as
``affirmative action.'' Section 1.4(b)(2)(i) is the general disparate-
impact prohibition, which states that a ``recipient . . . may not . . .
utilize criteria or methods of administration which have the effect of
subjecting persons to discrimination because of their race, color, or
national origin.'' Beyond that general prohibition, Sec. 1.4(b)(3)
addresses a Federal-funding recipient's selection of the site or
location of facilities and includes two references to ``effect'' that
extend to conduct with an unintentional disparate impact. Section
1.4(b)(6) concerns the use of ``affirmative action'' and provides that
funding recipients may (and sometimes must) use race, color, or
national origin to overcome unintentional disparate ``effects,'' but
does not expressly specify that the funding recipient must narrowly
tailor such use nor that this use must serve a compelling governmental
interest, as is required to satisfy strict scrutiny. Finally, Sec.
1.4(c) addresses prohibited discriminatory employment practices and
extends beyond intentional discrimination to conduct that ``tends'' to
have a discriminatory effect.
There are serious statutory and constitutional concerns associated
with Sec. 1.4's prohibition on discrimination because that prohibition
encompasses disparate-impact liability. HUD also has serious policy
concerns with its current disparate-impact regulations because they
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 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. Alexander
v. Sandoval, 532 U.S. 275, 280, 286 n.6 (2001). That is the ``single,
best meaning'' of Title VI. See Loper Bright Enters. v. Raimondo, 603
U.S. 369, 400 (2024). Sandoval calls into serious doubt the legality of
HUD's ``disparate-impact regulations.'' See 532 U.S. at 281-82, 284-85
(noting that DOJ's then-existing regulations, which HUD's current
regulations mirror, were 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 of Title VI, subsequent cases such as Loper Bright have
made clear that HUD cannot extend Title VI beyond its 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, HUD would have concluded that the best
reading of Title VI is that it prohibits only intentional
discrimination.
Title VI authorizes agencies to promulgate regulations ``to
effectuate'' the statute's prohibition of intentional discrimination.
42 U.S.C. 2000d-1. The current prohibition of conduct having an
unintentional disparate impact reaches a vastly broader scope than the
statute itself. This scope 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 HUD's Title VI
regulations pass constitutional muster under the Equal Protection
Clause. As the Supreme Court recently held in Students for Fair
Admissions, Inc. v. President & Fellows of Harvard College, ``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. 206 (2023) (SFFA) (internal quotation
marks omitted) (first quoting Yick Wo v. Hopkins, 118 U.S. 356, 369
(1886); and then quoting Regents of Univ. of California v. Bakke, 438
U.S. 265, 289-90 (1978) (Powell, J.)). Despite the promises of the
Equal Protection Clause, a funding recipient's risk of disparate-impact
liability under HUD's Title VI regulations is triggered by
unintentional disparate outcomes, which the recipient may not even know
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 it 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. The serious constitutional
concerns raised by these perverse incentives further confirm that the
best reading of Title VI is that it prohibits only intentional
discrimination and does not authorize HUD to impose disparate-impact
liability under that statute. 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 encouraged or coerced 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 national origin
[[Page 51418]]
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 ``affirmative 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 overcome the effects of'' unintended racial disparities.
24 CFR 1.4(b)(6). Thus, for substantially the same reasons as above,
the ``affirmative action'' provision raises serious constitutional
concerns.
As summarized above, there are serious statutory and constitutional
concerns with HUD's disparate-impact regulations under Title VI. But
even if the regulations were legal, HUD finds that eliminating the
potential constitutional concerns addressed above would independently
justify the amendment of 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 in order to ``avoid[ ]
raising a non-trivial constitutional question''). And even if the
regulations did not raise serious constitutional concerns, HUD finds
that eliminating the costs and confusion caused by the mismatch between
the statute and the Title VI disparate-impact regulations would
independently justify the repeal of the regulations.
2. Serious Policy Concerns
HUD also has serious policy concerns with the imposition of
disparate-impact liability. Although HUD expresses its policy concerns
with disparate-impact liability 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, ``[o]n 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, including HUD,
have promulgated pursuant to Title VI. 532 U.S. at 280-82.
Additionally in practice, disparate-impact liability may lead
covered entities to engage in racial balancing even as Title VI forbids
intentional racial discrimination. This tension tends to create
confusion as well as undermine public confidence in the nation's civil
rights laws and 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'' utilized by the
programs 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 confusion undermines the law's
ability to teach principles of nondiscrimination and is evident in,
among other things, many of the grant proposals that HUD awarded funds
to in past years.
HUD further notes 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 HUD could continue to pursue disparate-impact
liability. Repealing the disparate-impact regulations would eliminate
this incongruent enforcement.
Accordingly, through this supplemental notice of proposed
rulemaking, HUD is continuing its fulfillment of directives under
Executive Order 14281. As discussed below, HUD's Title VI regulations
include provisions that directly implement or allude to discriminatory
effects and disparate-impact liability. HUD accordingly proposes to
revise or remove those provisions for the reasons set forth above.
HUD is also seeking to make its Title VI regulations consistent
with regulatory changes to 24 CFR 100.5 and 100.500 proposed by HUD's
2026 proposed rule. The changes proposed in this supplemental notice of
proposed rulemaking would also align with DOJ's 2025 final rule. HUD's
Title VI regulations resulted from uniform amendments adopted by
Federal agencies and use the same or similar language as DOJ's former
Title VI regulations. The proposed changes would revise or remove those
provisions and improve consistency between DOJ and HUD regulations that
implement Title VI's nondiscrimination requirements. This rule's
proposed changes would also further the Administration's regulatory
reform efforts by promoting the rule of law through consistency in the
Federal government's interpretation of Title VI.
III. This Supplemental Notice of Proposed Rulemaking
This supplemental notice of proposed rulemaking proposes revisions
to 24 CFR 1.4 and reopens the public comment period on HUD's 2026
proposed rule. New comments received during this re-opened period will
only be considered if they concern changes proposed in this
supplemental notice of proposed rulemaking. For an explanation of HUD's
extensive solicitation and review of public comment on prior disparate-
impact and discriminatory-effects rulemakings, see HUD's 2026 proposed
rule at 91 FR 1476-77. HUD is proposing the following changes to Sec.
1.4:
Sec. 1.4(b)(2)
Section 1.4 implements Title VI's prohibition against intentional
discrimination on the grounds of race, color, or national origin, in
the participation in, denial of benefits of, or other subjection to
discrimination. See also 24 CFR 1.3. Paragraph (b) of Sec. 1.4
describes discriminatory actions specifically prohibited by HUD's Title
VI regulations, and existing paragraph (b)(2)(i) incorporates a general
prohibition on Federal financial assistance recipients using criteria
or methods of administration that have the effect of ``subjecting
persons to discrimination because of their race, color or national
origin,'' or ``defeating or substantially impairing accomplishment of
the objectives of the program or activity as respect to persons of a
particular race, color, or national origin.'' Because this paragraph
incorporates a general prohibition on conduct producing unintended
discriminatory effects, HUD is proposing to remove paragraph (b)(2)(i)
in its entirety and redesignate existing paragraphs (b)(2)(ii) and
(iii) as (b)(2)(i) and (ii).
[[Page 51419]]
Sec. 1.4(b)(3)
Paragraph (b)(3) of Sec. 1.4 addresses a Federal-funding
recipient's or applicant's selection of the site or location of
facilities. It prohibits applicants and recipients from discriminating,
through purpose ``or effect,'' on the grounds of race, color, or
national origin in determining the site or location of housing,
accommodations, or facilities, or in making related selections.
Paragraph (b)(3) also prohibits selections made with the purpose ``or
effect'' of ``defeating or substantially impairing the accomplishment
of the objectives of the [Title VI]'' or 24 CFR part 1. HUD is
proposing to remove both instances of the phrase ``or effect,'' because
they extend to unintentional discriminatory effects.
Sec. 1.4(b)(6)
Existing paragraph (b)(6)(i) of Sec. 1.4 requires recipients to
take ``affirmative action to overcome the effects of prior
discrimination'' by the recipient against persons on the ground of
race, color, or national origin. This provision goes beyond the Equal
Protection Clause, which 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.).
Moreover, even putting aside the mandatory language, this provision
does not expressly require narrow tailoring to counter particular past
discrimination, but rather simply ``affirmative action to overcome the
effects of prior discrimination.'' 24 CFR 1.4(b)(6)(i). This provision
accordingly promotes potentially illegal race, color, and national
origin discrimination. Moreover, in some instances, it may even coerce
recipients to consider and use race preferences when the recipient may
not want to. This is contrary to HUD's 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.
Existing paragraph (b)(6)(ii) requires recipients to take
affirmative action even in the absence of prior discrimination to
``overcome the effects of conditions'' that resulted in limiting the
participation of persons of a particular race, color, or national
origin in an applicable HUD program. This provision points not to
intentional discrimination, but rather to the unintentional ``effects
of conditions.'' It consequently encourages intentional racial
classifications, racial preferences, and other race-based actions
without requiring the compelling governmental interest and narrow
tailoring that the Equal Protection Clause demands. This section is
unlawful under the Equal Protection Clause. This rule, therefore,
proposes to remove paragraph (b)(6).
Sec. 1.4(c)(2)
Existing paragraph (c)(2) extends the prohibition on discrimination
to employment practices of the funding recipient even ``[w]here a
primary objective of the Federal financial assistance is not to provide
employment'' if discrimination in the non-funded employment practices
``tends, on the ground 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 part 1
applies.'' This paragraph prohibits not only intentional discrimination
but also conduct that ``tends'' to have a discriminatory effect.
Moreover, HUD notes that paragraph (c)(2)'s extension to employment
practices where the Federal funding's primary objective is not to
provide employment conflicts with 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).
Because paragraph (c)(2) applies to employment practices that
unintentionally produce discriminatory effects and conflicts with the
statutory limitation in 42 U.S.C. 2000d-3, HUD is proposing to remove
paragraph (c)(2) in its entirety. HUD is proposing to redesignate
paragraph (c)(1) as paragraph (c) and to make a technical edit to the
last sentence of that paragraph, which cross-references part III of
Executive Order 11246, Equal Employment Opportunity, (Sept. 24, 1965).
Executive Order 14173, Ending Illegal Discrimination and Restoring
Merit-Based Opportunity (Jan. 21, 2025), revoked Executive Order 11246.
Therefore, HUD is proposing to revise the last sentence of newly
redesignated paragraph (c) to state, ``The requirements applicable to
construction employment under such program or activity are those
specified in or pursuant to Executive Order 14173 or any executive
order which supersedes or amends it.'' Section 3(b) of Executive Order
14173 specifies new requirements for the Federal contracting process
and for Federal contractors and subcontractors.
IV. Findings and Certifications
Regulatory Review--Executive Orders 12866 and 13563
Under Executive Order 12866, Regulatory Planning and Review, a
determination must be made regarding whether a regulatory action is
significant and, therefore, subject to review by the Office of
Management and Budget in accordance with the requirements of the order.
58 FR 51735, 51738 (Sep. 30, 1993). This supplemental notice of
proposed rulemaking was determined to be a significant regulatory
action under section 3(f) of Executive Order 12866, but not
economically significant under section 3(f)(1).
Executive Order 13563, Improving Regulation and Regulatory Review
directs executive agencies to analyze regulations that are ``outmoded,
ineffective, insufficient, or excessively burdensome, and to modify,
streamline, expand, or repeal them in accordance with what has been
learned.'' 76 FR 3821, 3821 (Jan. 18, 2011). Executive Order 13563 also
directs that, where relevant, feasible, and consistent with regulatory
objectives, and to the extent permitted by law, agencies identify and
consider regulatory approaches that reduce burdens and maintain
flexibility and freedom of choice for the public. As previously
discussed, this supplemental notice of proposed rulemaking removes
unnecessary regulations and is consistent with Executive Order 13563.
Data limitations make the costs and benefits of the rule difficult
to quantify. Although it does not represent the monetary impact of the
rule, HUD issued approximately 4,412 separate grants and 5,393 separate
subsidies totaling approximately $170,153,001,187 (approximately
$56,530,401,288 in grants and $113,622,599,899 in subsidies) over the
past 3 calendar years (CYs) (CY23-CY25). HUD's Title VI-related, active
investigations and compliance reviews regarding these funds and their
recipients totaled 500 over a 3-year period (CY23-CY25), and HUD's
Title VI-related, closed investigations and compliance reviews totaled
585 over those same 3 years (CY23-CY25).
HUD does not track which of its investigations and compliance
reviews
[[Page 51420]]
involve solely allegations of disparate-impact discrimination. For
enforcement actions that relate to both intentional discrimination and
conduct having an unintentional disparate impact, HUD does not track
and cannot reliably quantify the costs attributable to the disparate-
impact portions of enforcement actions. That the existence of a
disparate impact is sometimes a factor that may be considered in
evaluating intentional discrimination further impedes monetizing costs
and benefits. Therefore, the overall cost effect on HUD is difficult to
quantify. The deregulatory action should decrease HUD's enforcement
costs by allowing HUD to focus enforcement procedures and resources on
intentional discrimination cases. It should also produce a qualitative
benefit by aligning HUD's Title VI regulations with the best reading of
Title VI and DOJ's revised Title VI regulations. It should also have
the benefit, albeit difficult to quantify, of bringing HUD's conduct in
line with the law. Similarly, HUD is unable to quantify how funding
recipients will respond to the regulatory changes. However, HUD
anticipates that the proposed deregulatory action should result in
greater flexibility and lower compliance costs for recipients.
Ultimately, HUD does not envision that this proposed rule will
appreciably increase administrative costs or compliance costs for
funding recipients who must also adhere to the regulations of another
department or agency. This proposed deregulatory action does not create
any new obligations for funding recipients. On the contrary, by
eliminating disparate-impact liability from the regulation, it
eliminates a source of regulatory confusion, narrows the conduct
prohibited, and thus lessens the costs of compliance and potential
liability. Moreover, recipients who 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., 24
CFR 1.5. These contractual assurances impose varying requirements that
each Federal funding source deems necessary. Recipients receiving funds
from more than one Federal agency will remain responsible for complying
with all applicable assurances and regulatory requirements. And in any
event, HUD notes that other agencies are currently amending their
regulations to align with the changes made in this rule, so HUD
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, HUD believes that this proposed rule is
consistent with the principles of Executive Orders 12866 and 13563,
including the requirements that, to the extent permitted by law, HUD
adopt a regulation only upon a reasoned determination that its benefits
justify its costs.
Executive Order 12250
Pursuant to section 1-202 of 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.'' Additionally, section 1-101 of Executive
Order 12250 delegated the President's responsibility to approve Title
VI regulations to the Attorney General. See 42 U.S.C. 2000d-1. DOJ has
reviewed and approved this proposed rule.
Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.)
generally requires an agency to conduct a regulatory flexibility
analysis of any rule subject to notice and comment rulemaking
requirements unless the agency certifies that the rule will not have a
significant economic impact on a substantial number of small entities.
This supplemental notice of proposed rulemaking would not impose new
compliance obligations on small entities. To the extent that it has any
economic effect, HUD expects the effect to be deregulatory because the
proposal would remove effects-based provisions from HUD's Title VI
regulations. As such, there is no change in burden for those involved
in a challenged practice. Accordingly, the undersigned certifies that
the rule will not have a significant economic impact on a substantial
number of small entities.
Executive Order 14192--Unleashing Prosperity Through Deregulation
Executive Order 14192 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. This supplemental notice of proposed rulemaking
proposes to remove unnecessary existing regulations and will impose no
regulatory costs.
Executive Order 13132--Federalism
Executive Order 13132 prohibits an agency from publishing any rule
that has federalism implications if the rule either: (i) imposes
substantial direct compliance costs on State and local governments and
is not required by statute, or (ii) preempts State law, unless the
agency meets the consultation and funding requirements of section 6 of
the Executive order. This supplemental notice of proposed rulemaking
does not have federalism implications and does not impose substantial
direct compliance costs on State and local governments or preempt State
law within the meaning of the Executive Order.
Environmental Impact
This supplemental notice of proposed rulemaking is a policy
document that sets out nondiscrimination standards. Accordingly, under
24 CFR 50.19(c)(3), this rule is categorically excluded from
environmental review under the National Environmental Policy Act (42
U.S.C. 4321 et seq.).
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C.
1531-1538) (UMRA) establishes requirements for Federal agencies to
assess the effects of their regulatory actions on State, local, and
Tribal governments, and on the private sector. This supplemental notice
of proposed rulemaking does not impose any Federal mandates on any
State, local, or Tribal governments, or on the private sector, within
the meaning of the UMRA.
List of Subjects in 24 CFR Part 1
Administrative practice and procedure, Civil rights, Reporting and
recordkeeping requirements.
Accordingly, for the reasons stated in the preamble, HUD proposes
to amend 24 CFR part 1 as follows:
PART 1--NONDISCRIMINATION IN FEDERALLY ASSISTED PROGRAMS OF THE
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT--EFFECTUATION OF TITLE
VI OF THE CIVIL RIGHTS ACT OF 1964
0
1. The authority citation for part 1 continues to read as follows:
Authority: 42 U.S.C. 2000d-1 and 3535(d).
0
2. Amend Sec. 1.4 by:
0
a. Revising paragraphs (b)(2) and (3);
0
b. Removing paragraph (b)(6); and
0
c. Revising paragraph (c).
The revisions read as follows:
Sec. 1.4 Discrimination Prohibited.
* * * * *
(b) * * *
(2)(i) A recipient, in operating low-rent housing with Federal
financial
[[Page 51421]]
assistance under the United States Housing Act of 1937, as amended (42
U.S.C. 1401 et seq.), shall assign eligible applicants to dwelling
units in accordance with a plan, duly adopted by the recipient and
approved by the responsible Department official, providing for
assignment on a community-wide basis in sequence based upon the date
and time the application is received, the size or type of unit
suitable, and factors affecting preference or priority established by
the recipient's regulations, which are not inconsistent with the
objectives of title VI of the Civil Rights Act of 1964 and this part 1.
The plan may allow an applicant to refuse a tendered vacancy for good
cause without losing his standing on the list but shall limit the
number of refusals without cause as prescribed by the responsible
Department official.
(ii) The responsible Department official is authorized to prescribe
and promulgate plans, exceptions, procedures, and requirements for the
assignment and reassignment of eligible applicants and tenants
consistent with the purpose of paragraph (b)(2)(i) of this section,
this part 1, and title VI of the Civil Rights Act of 1964, in order to
effectuate and ensure compliance with the requirements imposed
thereunder.
(3) In determining the site or location of housing, accommodations,
or facilities, an applicant or recipient 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 part 1 applies, on the ground 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 part 1.
* * * * *
(c) Employment practices. Where a primary objective of the Federal
financial assistance to a program or activity to which this part 1
applies is to provide employment, a recipient may not, directly or
through contractual or other arrangements, subject a person to
discrimination on the ground of race, color, or national origin in its
employment practices under such program or activity (including
recruitment or recruitment advertising, employment, layoff,
termination, upgrading, demotion, transfer, rates of pay or other forms
of compensation and use of facilities). The requirements applicable to
construction employment under such program or activity are those
specified in or pursuant to Executive Order 14173 or any executive
order which supersedes or amends it.
Scott Turner,
Secretary.
[FR Doc. 2026-16228 Filed 8-7-26; 8:45 am]
BILLING CODE 4210-67-P
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</html>Indexed from Federal Register on August 10, 2026.
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