Rescission of Executive Order 11246 Implementing Regulations

Issuing agencies

Abstract

On January 21, 2025, President Trump issued Executive Order 14173, "Ending Illegal Discrimination and Restoring Merit-Based Opportunity," which revoked Executive Order 11246. Accordingly, the U.S. Department of Labor publishes this final rule to rescind the implementing regulations for Executive Order 11246.

Full Text

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<title>Federal Register, Volume 91 Issue 161 (Friday, August 21, 2026)</title>
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[Federal Register Volume 91, Number 161 (Friday, August 21, 2026)]
[Rules and Regulations]
[Pages 54444-54480]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-17114]



[[Page 54443]]

Vol. 91

Friday,

No. 161

August 21, 2026

Part II





 Department of Labor





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 Office of Federal Contract Compliance Programs





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40 CFR Parts 60-1, 60-2, 60-3, et al.





Rescission of Executive Order 11246 Implementing Regulations; Interim 
Final Rule

Federal Register / Vol. 91 , No. 161 / Friday, August 21, 2026 / 
Rules and Regulations

[[Page 54444]]


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DEPARTMENT OF LABOR

Office of Federal Contract Compliance Programs

[Docket No. OFCCP-2025-0001]

41 CFR Parts 60-1, 60-2, 60-3, 60-4, 60-20, 60-30, 60-40, 60-50, 
and 60-999

RIN 1250-AA17


Rescission of Executive Order 11246 Implementing Regulations

AGENCY: Office of Federal Contract Compliance Programs, Labor.

ACTION: Final rule.

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SUMMARY: On January 21, 2025, President Trump issued Executive Order 
14173, ``Ending Illegal Discrimination and Restoring Merit-Based 
Opportunity,'' which revoked Executive Order 11246. Accordingly, the 
U.S. Department of Labor publishes this final rule to rescind the 
implementing regulations for Executive Order 11246.

DATES: This rule is effective on October 26, 2026.

FOR FURTHER INFORMATION CONTACT: Kenneth Wolfe, Director, Office of 
Federal Contract Compliance Programs, 200 Constitution Avenue NW, 
Washington, DC 20210. Telephone: 202-693-0101. Email: 
<a href="/cdn-cgi/l/email-protection#0b646d68687b546c7e626f6a65686e4b6f6467256c647d"><span class="__cf_email__" data-cfemail="c6a9a0a5a5b699a1b3afa2a7a8a5a386a2a9aae8a1a9b0">[email&#160;protected]</span></a>.

SUPPLEMENTARY INFORMATION:

I. Executive Summary

    Prior to January 21, 2025, the U.S. Department of Labor (the 
Department) administered and enforced Executive Order (E.O.) 11246, as 
amended. Issued in 1965, and amended several times in the intervening 
years, E.O. 11246, and its implementing regulations at 41 CFR part 60-1 
et seq., prohibited covered Federal contractors and subcontractors \1\ 
from discriminating against employees and applicants because of race, 
color, religion, sex, sexual orientation, gender identity, national 
origin, or because they inquired about, discussed, or disclosed their 
compensation or that of others, subject to certain limitations. 
Contractors were also required to take certain affirmative actions to 
promote equal employment opportunity in their workplaces, as specified 
in 41 CFR part 60-2 and 41 CFR part 60-4.
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    \1\ Hereinafter, the term ``contractor'' is used to refer 
collectively to Federal contractors and subcontractors that fall 
under OFCCP's authority, unless otherwise expressly stated. This 
approach is consistent with OFCCP's regulations, which define 
``contract'' to include subcontracts and ``contractor'' to include 
subcontractors.
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    On January 21, 2025, E.O. 14173 revoked E.O. 11246. Accordingly, 
this final rule rescinds the regulations implementing E.O. 11246 and 
modifies the administrative enforcement proceeding procedures at 41 CFR 
part 60-30 to remove the E.O. 11246 components. The Department also 
determined that significant portions of the E.O. 11246 regulatory 
framework are legally vulnerable because they are inconsistent with 
constitutional principles, civil rights law, and statutory authority.

II. Background

A. E.O. 11246 and Development of Implementing Regulations

    Issued in 1965, E.O. 11246 required Federal contracts to include an 
``Equal Opportunity Clause'' barring discrimination and requiring 
affirmative action in employment based on race, creed, color, and 
national origin. 30 FR 12319 (Sept. 28, 1965). The Order has been 
amended in the intervening years: to add sex to contractors' 
nondiscrimination and affirmative action obligations, 32 FR 14303 (Oct. 
17, 1967); to exempt certain religious employers with respect to 
religious nondiscrimination obligations, 67 FR 77141 (Dec. 16, 2002); 
to prohibit contractors from retaliating against employees who inquire 
about, disclose, or discuss compensation, 79 FR 20749 (Apr. 11, 2014); 
and to add sexual orientation and gender identity to contractors' 
nondiscrimination obligations, 79 FR 42971 (July 23, 2014).
    Executive Order 11246 charged the Secretary of Labor with enforcing 
these nondiscrimination and affirmative action obligations and set 
forth specific sanctions and penalties.\2\ With respect to noncompliant 
contractors under E.O. 11246, the Secretary could publish the names of 
such contractors, cancel or suspend contracts, or debar them.\3\ 
Executive Order 11246 also authorized the Secretary of Labor to 
recommend that the Department of Justice (DOJ) or the Equal Employment 
Opportunity Commission (EEOC) bring appropriate civil and criminal 
cases in Federal court.\4\ In 1965, the Department created the Office 
of Federal Contract Compliance to discharge responsibilities assigned 
to the Secretary of Labor under E.O. 11246.\5\ The entity known as the 
Office of Federal Contract Compliance later became the Office of 
Federal Contract Compliance Programs (OFCCP). OFCCP promulgated its 
first permanent implementing regulations in 1968. 33 FR 7804 (May 28, 
1968). Those regulations have since been amended and expanded through 
successive rulemakings. The following subsection describes the current 
regulatory provisions implementing E.O. 11246 and the obligations they 
impose on contractors.
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    \2\ See E.O. 11246 Sec. 209.
    \3\ Id.
    \4\ Id.
    \5\ Dep't of Labor Secretary's Order No. 26-65, Office of 
Federal Contract Compliance (EEO), Establishment (Oct. 5, 1965).
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B. Overview of Current Regulations

1. Affirmative Action Provisions
    The affirmative action requirements for nonconstruction contractors 
are found at 41 CFR part 60-2. The Department first codified these 
regulations in February 1970. See 35 FR 2586 (Feb. 5, 1970). As amended 
in 2000, by 65 FR 68042 (Nov. 13, 2000), these regulations prescribe 
the contents of nonconstruction contractors' affirmative action 
programs (AAPs) and standards and procedures for evaluating the 
compliance of those programs. 41 CFR 60-2.1(a).
    Specifically, nonconstruction contractors with 50 or more employees 
and a contract of at least $50,000 must develop and maintain a written 
AAP for each of their establishments. 41 CFR 60-2.1(b). The $50,000 
threshold was promulgated in 1968 and has never been updated for 
inflation.\6\ Any contractor that fails to develop and maintain a 
written AAP for each of its establishments violates E.O. 11246 and can 
be subject to penalties and sanctions. 41 CFR 60-2.2. These regulations 
also specify the purpose and contents of AAPs. 41 CFR 60-2.10. 
Nonconstruction contractors must evaluate the racial, ethnic, and sex 
composition of their workforce and compare it against the relevant 
labor market and internal availability. 41 CFR 60-2.10(a)(1), 60-2.14, 
and 60-2.15. If the percentage of minorities or women employed in a 
particular job group is less than expected, ``the contractor's

[[Page 54445]]

AAP includes specific practical steps designed to address this 
underutilization.'' Id. The regulations likewise mandate that, when the 
percentage of minorities or women employed in a particular job group is 
less than would reasonably be expected given their availability 
percentage in that particular job group, the contractor must establish 
``placement goals'' that serve as objectives or targets that 
contractors must use to address disparities. 41 CFR 60-2.15(b). A 
placement goal must be ``at least equal to the availability figure 
derived for women or minorities, as appropriate, for th[e] job group.'' 
41 CFR 60-2.16(c). Contractors effectively must affirmatively take 
action with the aim of achieving a representation of minorities and 
women in their workforce that reflects the estimated availability of 
minorities and women. 41 CFR 60-2.12-2.15. There is no corresponding 
requirement to address the ``underutilization'' of other groups.
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    \6\ See 33 FR 7804, 7811 (May 28, 1968) (establishing an AAP 
dollar threshold of a single contract of $50,000); see also 43 FR 
49240, 49247 (Oct. 20, 1978) (updating the AAP dollar threshold to a 
single contract of $50,000 or more, or Government bills of lading 
which in any 12-month period, total or can reasonably be expected to 
total $50,000 or more); see also 45 FR 86216, 86237 (Dec. 30, 1980) 
(updating the AAP dollar threshold to a single contract of $50,000 
or more, or contracts (including Government bills of lading) which, 
in any 12-month period total $50,000 or more, or reasonably may be 
expected to total $50,000 or more); see also 65 FR 68022, 68042 
(Nov. 13, 2000) (reverting back to 1978 language by amending 60-
1.40(a)(1)(ii) to read ``Has Government bills of lading which in any 
12-month period, total or can reasonably be expected to total 
$50,000 or more'').
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    The regulations set forth in 41 CFR 60-2.12 through 41 CFR 60-2.15 
allow contractors to treat minorities in the aggregate, meaning the 
question is not whether a particular group is underutilized but whether 
minorities as a whole are underutilized. Likewise, a contractor may 
generally set placement goals for minorities as a whole so long as 
there are no substantial disparities in the utilization of certain 
minority groups. 41 CFR 60-2.16(d).
    The affirmative action requirements for construction contractors 
are found at 41 CFR part 60-4. This part applies to all contractors, 
subcontractors, contracting agencies, and applicants, as defined in 41 
CFR 60-1.3, that are party to or seek to enter Federal and federally 
assisted construction contracts in excess of $10,000, as well as 
certain nonconstruction contractors awarding construction contracts. 
The $10,000 threshold was promulgated in 1978 and has never been 
updated for inflation.\7\ Nonconstruction contractors and 
subcontractors are required to comply with these requirements if, as a 
part of their Federal contract or subcontract, construction work is 
necessary in whole or in part to the performance of a nonconstruction 
contract or subcontract. See 41 CFR 60-4.1. Part 60-4 defines coverage, 
specifies clauses to be included in contracts, provides a procedure to 
ensure compliance by covered contractors, and specifies certain 
recordkeeping and reporting requirements.
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    \7\ See 43 FR 14888, 14894 (Apr. 7, 1978) (establishing the 
requirements for construction contractors and subcontractors subject 
to Executive Order 11246. Under 41 CFR 60-4.1, part 60-4 applies to 
all contractor and subcontractors which hold any Federal or 
federally assisted construction contracts in excess of $10,000). 
Although part 60-4 was revised in 1980, no changes were made to the 
dollar threshold of $10,000. See 45 FR 65976 (Oct. 3, 1980).
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    Instead of ``placement goals'' that apply to nonconstruction 
contractors, the Department developed ``participation goals'' for 
females and minorities that construction contractors must use as 
affirmative action benchmarks.\8\ For females, the participation goal 
is set to 6.9% of the total hours worked by the contractor's 
construction workforce in each trade. For minorities, there are 
participation goals for each geographic area in the United States. 
These goals apply to minority groups in the aggregate and include those 
groups enumerated in the definition of ``minority'' at 41 CFR 60-
4.3(a)(1)(d).\9\ Covered contractors are required to apply the goals to 
each construction trade in their workforce in the relevant geographic 
area. Section 60-4.6 outlines participation goals and timetables for 
minority and female utilization on construction projects. The 
participation goals and related requirements apply to all covered 
contractors, without regard to their utilization of females or 
minorities.\10\ The goals also apply to all of the contractor's 
construction work performed in the covered geographic area, whether or 
not it is Federal or federally assisted. Unlike placement goals 
applicable to nonconstruction contractors, there is no regulatory 
language forbidding government-set participation goals from being 
treated as quotas. Compare 41 CFR 60-4.3 with 41 CFR 60-2.16. The 
regulations nonetheless prohibit using ``the goals and timetables or 
affirmative action standards to discriminate against any person because 
of race, color, religion, sex, sexual orientation, gender identity, or 
national origin.'' 41 CFR 60-4.3(a)(10).
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    \8\ The participation goals for females and minorities were 
originally issued in a 1978 Federal Register notice, 43 FR 14899 
(Apr. 7, 1978) (Appendices A and B). The participation goals for 
minorities were later updated in a 1980 Federal Register notice, 45 
FR 65979 (Oct. 3, 1980), but the goals for females remained 
unchanged.
    \9\ ``Minority'' is defined to include Black; Hispanic; Asian 
and Pacific Islander; and American Indian or Alaskan Native 
individuals. 41 CFR 60-4.3(a)(1)(d).
    \10\ By contrast, nonconstruction contractors must only 
establish placement goals if they discover underutilization of women 
and/or minorities in a particular job group at a particular 
establishment. 41 CFR 60-2.16.
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    Section 60-4.2 requires all contracting officers and applicants for 
construction contracts to include a ``Notice of Requirement for 
Affirmative Action to Ensure Equal Employment Opportunity (Executive 
Order 11246)'' in solicitations for offers and bids on all Federal and 
federally assisted construction contracts or subcontracts. It further 
requires covered nonconstruction contractors to include this notice in 
all construction agreements that are necessary in whole or in part to 
the performance of the covered nonconstruction contract. The notice 
includes information on minority and female participation goals 
applicable to the contractor's workforce. Section 60-4.2 also provides 
that contracting officers, applicants for construction contracts, and 
nonconstruction contractors must notify the Director of OFCCP in 
writing within 10 working days of the award of a covered contract in 
excess of $10,000.
    Section 60-4.3 further requires these entities to incorporate the 
``Standard Federal Equal Employment Opportunity Construction Contract 
Specifications (Executive Order 11246)'' set forth in 41 CFR 60-4.3 
into all nonexempt Federal contracts and subcontracts. These standards 
describe the female and minority participation goal requirements and 
outline specific actions covered contractors must take to ensure equal 
employment opportunity in their work sites. For example, contractors 
must maintain a working environment free of harassment, intimidation, 
and coercion at all sites and must establish and maintain a current 
list of minority and female recruitment sources. See 41 CFR 60-
4.3(a)(7)(a) and (b).
2. Nondiscrimination Provisions
    Part 60-1 describes various obligations of contractors pursuant to 
E.O. 11246. One key provision is 41 CFR 60-1.4, which describes the 
equal opportunity clause that must be included in government contracts. 
This section includes the requirement that contractors state in all 
solicitations or advertisements for employment that applicants will 
receive consideration without regard to one or more of the protected 
bases and that contractors notify labor organizations of their 
obligations under E.O. 11246.
    Contractors who meet the requirements set forth in 41 CFR 60-1.7 
must file an annual Employer Information Report (EEO-1 Report) with the 
EEOC. In this report, covered contractors include information on their 
workforce demographics, including data by job category, sex, race, and 
ethnicity.\11\
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    \11\ In this final rule, the Department is rescinding the 41 CFR 
60-1.7 regulations, solely to the extent that they are codified in 
the E.O. 11246 regulations. This final rule does not impact EEOC's 
actions with respect to the EEO-1 report.

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[[Page 54446]]

    Section 60-1.10 requires the contractor to notify the Department of 
State and the Director of OFCCP when an employee or potential employee 
is denied a visa of entry to a country in which or with which it is 
doing business and it believes the denial was due to one, or more, of 
the protected bases covered by E.O. 11246.
    Section 60-1.12 outlines the record retention requirements that 
apply to covered contractors under E.O. 11246. These regulations 
require contractors to preserve any personnel or employment record made 
or kept for a period of not less than two years from the date of the 
making of the record or the personnel action involved, whichever occurs 
later. However, if the contractor has fewer than 150 employees or does 
not have a contract of at least $150,000, the record retention period 
is one year from the date of the making of the record or the personnel 
action involved, whichever occurs later. This section also provides 
that the contractor must be able to identify the gender, race and 
ethnicity of each employee for any record the contractor maintains. 
Where possible, the contractor must also identify the gender, race, and 
ethnicity of each applicant or internet Applicant, as defined at 41 CFR 
60-1.3.
    Section 60-1.20 outlines the investigative methods the Department 
uses to evaluate a contractor's compliance with the E.O. 11246 
regulations. A compliance evaluation may consist of one or any 
combination of the investigative procedures listed in the regulations, 
i.e., a compliance review, an off-site review of records, a compliance 
check, and/or a focused review. This section also provides that if a 
contractor fails to submit an AAP and the supporting documents within 
30 calendar days of the Department's request, the Department may 
initiate enforcement procedures. Section 60-1.40 requires the 
development and maintenance of an AAP under E.O. 11246. This section 
requires each contractor with 50 or more employees and a contract of 
$50,000 or more to develop an annual AAP for each of their 
establishments. Pursuant to these regulations, contractors must 
undertake the specific equal employment opportunity efforts set forth 
in 41 CFR part 60-2 (such as analyses of the contractor's employment 
processes) and document these efforts in a written AAP.
    Part 60-20 sets forth the types of sex discrimination prohibited 
under E.O. 11246. This part interprets the Order's prohibition on 
discrimination ``because of sex'' to bar both disparate treatment and 
facially neutral employment practices that have a disparate impact on 
the basis of sex unless justified by business necessity. It addresses a 
broad range of employment practices, including recruitment, hiring, 
promotion, compensation, fringe benefits, training, layoffs, and 
terminations. The regulations specifically address sex-based 
distinctions related to family status; sex stereotypes; sexual 
orientation and gender identity; and pregnancy, childbirth, and related 
medical conditions.
3. Administrative Proceedings
    The regulations at 41 CFR 60-1.26 were first promulgated in 1977 
and authorize OFCCP to initiate administrative proceedings within the 
Department if OFCCP finds that the contractor violated E.O. 11246 or 
its regulatory requirements. 41 CFR 60-1.26(a)(1)(i)-(ii) and (b)(1). 
The proceedings are conducted under the supervision of the Solicitor of 
Labor and are adjudicated by a Department of Labor Administrative Law 
Judge (ALJ) and the Administrative Review Board. 41 CFR 60-
1.26(a)(1)(i)-(ii) and (b) and 41 CFR 60-30.27-30.30. OFCCP is 
specifically authorized to seek back pay and other make whole relief 
for victims of discrimination. 41 CFR 60-1.26(a)(2). And it may refer 
matters to the DOJ for judicial proceedings. 41 CFR 60-1.26(c). 
Monetary relief is not referenced in the ``Sanctions and Penalties'' 
section of E.O. 11246, which authorizes the Secretary to publish a list 
of noncompliant contractors; cancel, suspend, or terminate contracts; 
and debar such contractors. E.O. 11246, sec. 209. The Order also 
authorizes the Secretary to recommend to the DOJ or the EEOC that 
appropriate proceedings be instituted under Title VII of the Civil 
Rights Act of 1964, which would allow these agencies to seek monetary 
damages in Federal court for certain violations. Id.
    Administrative proceedings brought under 41 CFR 60-1.26 are 
governed by the procedural regulations at 41 CFR part 60-30. In such 
proceedings, a Department of Labor ALJ resolves motions, receives 
evidence and testimony, and holds oral arguments. 41 CFR 60-30.8-30.11 
and 60-30.14. At the end of the proceedings, the ALJ ``recommend[s] 
findings, conclusions, and a decision'' as to whether the contractor 
violated the Equal Opportunity Clause and, if so, what sanctions to 
impose. 41 CFR 60-30.27. Either party may file exceptions to the ALJ's 
recommended decision and order with the Administrative Review Board, 
which issues a final agency decision based on the record created before 
the ALJ. 41 CFR 60-30.27-30.30. Part 60-30 also governs administrative 
proceedings authorized under Section 503 of the Rehabilitation Act of 
1973, as amended (Section 503) and the Vietnam Era Veterans' 
Readjustment Assistance Act of 1974, as amended (VEVRAA).
4. Other Requirements
    The Uniform Guidelines on Employee Selection Procedures (UGESP) are 
located at 41 CFR part 60-3 and 29 CFR part 1607. UGESP applies to 
``tests and other selection procedures which are used as a basis for 
any employment decision.'' 29 CFR 1607.2(B). UGESP was jointly adopted 
by the Department of Labor, the EEOC, the Civil Service Commission, and 
DOJ. 29 CFR 1607.1. When a test or other selection procedure is 
determined to have an adverse impact on minorities or women, UGESP 
requires the contractor to validate the test or procedure and to retain 
the validation documentation. Under UGESP, each contractor must 
maintain records and other information for each job sufficient to 
permit analyses of the impact of its selection procedures on the 
employment opportunities of people based on race, sex, or ethnic group. 
Using this information, the contractor and the Department identify and 
evaluate the contractor's selection procedures for adverse impact. As 
part of the Department's proposed rescission of the E.O. 11246 
regulations, the Department proposed to rescind the 41 CFR part 60-3 
regulations, solely to the extent that they were codified in the E.O. 
11246 regulations. This action does not impact other agencies' 
interpretation and application of UGESP, or the existence of UGESP more 
broadly.
    Part 60-40 describes the rules and restrictions the agency has in 
place for providing public access to its records. Part 60-50 sets forth 
the Department's interpretations and guidelines for enforcing its 
religion and national origin discrimination protections.
    Lastly, 41 CFR part 60-999 provides information on Office of 
Management and Budget (OMB) approved information collections relevant 
to the regulations. The information in this part is outdated and refers 
to regulatory provisions that the Department is rescinding through this 
rulemaking.

C. Notice of Proposed Rulemaking

    On January 21, 2025, President Trump issued E.O. 14173, ``Ending 
Illegal Discrimination and Restoring Merit

[[Page 54447]]

Based Opportunity,'' \12\ which, among other things, revoked E.O. 11246 
in its entirety and directed OFCCP within the Department to immediately 
cease each of the following: promoting ``diversity''; holding Federal 
contractors and subcontractors responsible for taking ``affirmative 
action''; and allowing or encouraging Federal contractors and 
subcontractors to engage in workforce balancing based on race, color, 
sex, sexual preference, religion, or national origin.\13\ On April 1, 
2025, President Trump issued a memorandum directing agencies to repeal 
regulations that conflict with recent Supreme Court precedents, 
including West Virginia v. EPA, 597 U.S. 697 (2022) and Students for 
Fair Admissions v. President & Fellows of Harvard Coll., 600 U.S. 181 
(2023) (SFFA).\14\
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    \12\ 90 FR 8633 (Jan. 31, 2025).
    \13\ Id. at 8634.
    \14\ Presidential Memorandum, Directing the Repeal of Unlawful 
Regulations (Apr. 1, 2025).
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    Accordingly, on July 1, 2025, the Department published a Notice of 
Proposed Rulemaking (NPRM) that proposed rescinding the E.O. 11246 
implementing regulations at 41 CFR parts 60-1, 60-2, 60-3, 60-4, 60-20, 
60-40, and 60-50, all promulgated under the authority of E.O. 11246. 
See 90 FR 28472 (July 1, 2025).
    The NPRM also proposed modifying the administrative enforcement 
proceeding procedures at 41 CFR part 60-30 to remove the E.O. 11246 
components. As these procedures also apply to VEVRAA and Section 503, 
the Department pursued separate rulemakings to incorporate these 
procedures directly into the VEVRAA and Section 503 implementing 
regulations. See 90 FR 28485 (July 1, 2025); 90 FR 28494 (July 1, 
2025).\15\ The Department also proposed rescinding the 41 CFR part 60-
999 regulations, which include outdated information on OMB-approved 
information collections related to the regulations.
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    \15\ If the VEVRAA and Section 503 rulemakings take effect, the 
Department will then rescind the 41 CFR part 60-30 regulations in 
their entirety.
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    In addition to E.O. 14173's revocation of E.O. 11246, the 
Department identified several other reasons for rescinding the 
regulations, including eliminating legal vulnerabilities related to the 
affirmative action requirements, improving the efficiency of the 
Federal contracting process, decreasing employer burden, and providing 
regulatory certainty to contractors and other stakeholders by aligning 
the regulations with recent executive orders impacting the Department's 
enforcement. See 90 FR 28472, 28474-28477 (July 1, 2025).

D. Executive Order 14398

    On March 26, 2026, President Trump issued E.O. 14398, ``Addressing 
DEI Discrimination by Federal Contractors.'' 91 FR 16147 (Mar. 31, 
2026). The Order requires Federal contractors to include a clause in 
their contracts affirming that they will not engage in ``disparate 
treatment based on race or ethnicity in the recruitment, employment . . 
. , contracting . . . , program participation, or allocation or 
deployment of an entity's resources'' in connection with the 
performance of work under the contract, and will furnish records 
necessary to verify compliance with this nondiscrimination obligation. 
Noncompliance may result in cancellation or suspension of the contract, 
and the contractor may be subject to debarment. Executive Order 14398 
also directs the Federal Acquisition Regulatory Council to promulgate 
implementing regulations.

III. Discussion of Public Comments and Reasons for Rescission

    As described above, on July 1, 2025, the Department published an 
NPRM in the Federal Register proposing rescission of parts 60-1, 60-2, 
60-3, 60-4, 60-20, 60-40, 60-50 and 60-999, and revisions to part 60-
30. 90 FR 28472 (July 1, 2025). The NPRM originally provided for a 60-
day comment period, with the comment period scheduled to close on 
September 2, 2025. After receiving comments requesting an extension of 
the comment period, the Department extended the comment period until 
September 17, 2025.\16\ DOL received 917 public comments in response to 
the NPRM. Comments came from individuals and from a wide variety of 
organizations, including employer associations, law firms, legal 
organizations, policy and advocacy groups, political organizations, 
unions, educational and research centers, and governmental entities, 
among others.
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    \16\ Rescission of Executive Order 11246 Implementing 
Regulations; Extension of Comment Period, 90 FR 42711 (Sept. 4, 
2025).
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    Commenters addressed many topics, including the legal basis for the 
regulations implementing E.O. 11246, those regulations' consistency 
with constitutional and statutory civil rights principles, the scope of 
the Department's enforcement authority, and the potential effects of 
rescission. After considering the comments received, the Department 
decided to finalize the rescission of the regulations implementing E.O. 
11246 and to modify the administrative enforcement proceeding 
procedures at 41 CFR part 60-30 to remove the E.O. 11246 components as 
proposed. As explained below, this determination is based on the 
following factors: (1) the revocation of E.O. 11246 provides a 
standalone and sufficient basis for rescinding regulations promulgated 
solely to implement that Order; (2) the affirmative action regulations 
conflict with the Constitution's equal protection principles and are 
inconsistent with Federal civil rights law, including Titles VI and VII 
of the Civil Rights Act of 1964; (3) significant portions of the E.O. 
11246 regulatory framework--including the affirmative action 
requirements and the provisions authorizing administrative enforcement 
and monetary relief under the E.O. 11246 implementing regulations--lack 
statutory authorization; and (4) rescission will promote more efficient 
and economical Federal contracting, reduce unnecessary compliance 
costs, and will not result in increased discrimination. The Department 
anticipates that rescission will actually encourage fairer, more merit-
based employment decision-making consistent with Federal civil rights 
law.

A. Revocation of E.O. 11246

    On January 21, 2025, E.O. 14173, ``Ending Illegal Discrimination 
and Restoring Merit-Based Opportunity,'' 90 FR 8633, revoked E.O. 
11246. Section 201 of E.O. 11246 delegated authority to the Secretary 
of Labor to adopt regulations and issue orders to carry out the 
purposes of that Executive Order and was the sole source of authority 
for the regulatory framework the Department is rescinding. Authority 
delegated by the President to the head of a department or agency is 
``revocable at any time by the President in whole or in part.'' 3 
U.S.C. 301. Once E.O. 11246 was revoked, the delegation of authority it 
contained necessarily terminated. As the NPRM explained, since the 
Department's regulations at 41 CFR parts 60-1, 60-2, 60-3, 60-4, 60-20, 
60-40, and 60-50 were promulgated solely to implement E.O. 11246, the 
revocation of E.O. 11246 is an independent and sufficient reason to 
rescind those regulations. 90 FR 28474. As a result, OFCCP's 
implementing regulations no longer have operative legal force and 
cannot be maintained or enforced.
    A commenter asserted that revocation of E.O. 11246 is not a 
sufficient basis for rescinding regulations promulgated under that 
Order. The commenter, National Nurses United (NNU), argued that 
Congress's recognition in 42 U.S.C. 2000e-17 that OFCCP may disapprove 
AAPs ``gives [OFCCP's] affirmative action obligations statutory 
status,'' and therefore those regulations cannot be

[[Page 54448]]

rescinded through executive action alone. As explained in greater 
detail in Section III(C), Congress does not confer statutory authority 
on agency action merely by acknowledging or referencing that action.
    Further, as the Competitive Enterprise Institute (CEI) explained, 
``The wisdom of revoking E.O. 11246 is not at issue, however. The 
president has already made that decision.'' Because the President 
revoked E.O. 11246, the Department has no authority to restore it or to 
implement it as if it were still in force. A labor attorney who 
supported E.O. 11246 agreed that ``[f]ollowing the revocation of E.O. 
11246, it is clearly appropriate for OFCCP to rescind those rules for 
which [E.O. 11246] was the sole authority and whose only purpose was to 
implement the executive order.''
    Because the delegation of authority to the Secretary of Labor in 
section 201 of E.O. 11246 was duly revoked, there is, as the Ethics and 
Public Policy Center (EPPC) commented, ``no longer any `illusion of 
authority' for the regulations.'' The American Civil Rights (ACR) 
Project similarly recognized OFCCP for ``undertaking the proper 
housekeeping of removing the Rescinded Regulations from the Code of 
Federal Regulations now that they are a nullity.''
    The Department concludes that the revocation of E.O. 11246 alone 
provides an independent and sufficient ground for rescinding the 
regulations. Moreover, as explained in Section III(B) below, even if 
Congress had conferred statutory status on the affirmative action 
regulations in parts 60-2 and 60-4, as NNU suggests, those regulations 
would nonetheless be unconstitutional.

B. The Affirmative Action Regulations Are Unlawful

1. The Nature of the Affirmative Action Regulations
    As explained in Section II(B) above, 41 CFR parts 60-2 and 60-4 
require covered nonconstruction contractors to establish placement 
goals to address any underutilization--i.e., where the percentage of 
minorities or women employed in a job group is less than reasonably 
would be expected given their availability. The ``central premise 
underlying [race- and sex-based goals] is that, absent discrimination, 
over time a contractor's workforce, generally, will reflect the gender, 
racial and ethnic profile of the labor pools from which the contractor 
recruits and selects.'' 41 CFR 60-2.10(a)(1). If contractors do not 
take sufficient action to meet goals, they could be found 
``nonresponsible'' for meeting affirmative action obligations, and 
further investigation and costly administrative enforcement may follow. 
See 41 CFR 60-2.2. Construction contractors are subject to similar 
minority and female participation goals, the main difference being such 
goals are set by the Department.
    In response to the NPRM, numerous commenters addressed the nature 
and operation of the affirmative action requirements contained in parts 
60-2 and 60-4. Many commenters characterized these affirmative action 
requirements as governmental discrimination that seeks demographic 
balancing in contractors' workforces. Independent Women, along with 
more than a hundred commenters participating in a coordinated letter 
campaign, criticized OFCCP's employment goals as being effectively 
``quotas.'' The joint comment of the Pacific Legal Foundation, Center 
for Equal Opportunity, and Defending Education (hereinafter 
collectively referred to as ``PLF'') questioned whether regulations 
authorizing racially preferential contracting policies are even 
authorized by E.O. 11246. PLF's comment stated: ``these regulations 
essentially require contractors to discriminate until they attain the 
government's desired demographics[.]'' That comment further criticized 
the E.O. 11246 implementing regulations' underlying assumption that any 
statistical disparity in workforce composition should be corrected, 
agreeing with the NPRM that there are many non-discriminatory reasons 
why a group may be over- or underrepresented in a particular job at a 
particular employer. See 90 FR 28472. In a joint comment, 22 state 
attorneys general likewise observed that the ``mere fact that a 
disparity exists thus says very little about whether discrimination is 
the cause.''
    The Center for Regulatory Freedom (CRF) cited 2024 data showing 
that the occupations of health care support, education, and office 
administration support are each between 70% to 85% female. Conversely, 
the occupations of construction or extraction, architecture, and 
transportation are each between 79% to 96% male. CRF added that there 
is no nationwide campaign to discourage women from going into 
construction. ``Instead,'' CRF wrote, ``a plethora of data is readily 
available explaining that these sex-based disparities exist because the 
sexes tend to lean towards pursuing different professions than those of 
the opposite sex. Regardless of whether the reason for these trends is 
biological or environmental, the disparities that exist are not a 
consequence of discrimination, but of individual choices reflected on a 
macro scale.''
    Some commenters, including NNU and Representative Robert C. Scott 
of Virginia, disagreed with the revocation of E.O. 11246, stressing its 
continuity with earlier executive orders regarding nondiscrimination in 
Federal contracting. But the continuity they asserted does not present 
a fully accurate comparison between E.O. 11246 and its predecessors. 
Unlike previous nondiscrimination executive orders, E.O. 11246 gave the 
Secretary of Labor enforcement authority over certain types of 
discrimination by governmental contractors. As the comment of America 
First Legal pointed out, as a result of regulations subsequently issued 
by the Secretary of Labor, E.O. 11246 ``transformed the concept of 
affirmative action from an obligation to eliminate racial 
discrimination into a requirement to implement a new kind of race-
conscious employment.''
    Other commenters commended E.O. 11246 for protecting 
minorities,\17\ promoting jobs for women in construction \18\ and, as 
E.O. 11246 was amended in 2016, for protecting workers from adverse 
action for discussing pay, thereby helping to uncover pay 
disparities.\19\ NNU characterized the revocation of E.O. 11246 as an 
attack on civil rights and equality for the working class. Nine members 
of the House of Representatives ``encourage[d] the Department to 
reconsider this proposed rule and continue upholding the principles of 
E.O. 11246.'' Rep. Scott likewise ``ask[ed] the Department to withdraw 
this harmful proposal and restore [E.O. 11246].''
---------------------------------------------------------------------------

    \17\ E.g., Comment of nine members of the House of 
Representatives.
    \18\ Comment of Chicago Women in Trades.
    \19\ Comment of National Partnership for Women & Families at 2-
3.
---------------------------------------------------------------------------

    NNU disagreed that there could be non-discriminatory reasons for 
statistical disparities, countering that such disparities reflect 
``occupational segregation, an active process whereby government 
policies and employer practices create a concentration of a particular 
group in a workplace, workforce, industry.'' The Department finds NNU's 
sweeping assertion that occupational disparities must be the product of 
``active'' wrongdoing to be flawed. There is no reason to expect free 
people making free choices to distribute themselves evenly across every 
occupation by sex and along racial categories that ``are arbitrary or 
undefined.'' See SFFA, 600 U.S. at 216-

[[Page 54449]]

17. Indeed, the Supreme Court has explained that ``[i]t is completely 
unrealistic to assume that unlawful discrimination is the sole cause of 
people's failing to gravitate to jobs and employers in accord with the 
laws of chance.'' Watson v. Fort Worth Bank & Trust, 487 U.S. 977, 992 
(1988). Treating uneven representation as presumptive proof of 
discriminatory design, as NNU suggests, is not serious analysis. 
Rather, it is a reflexive conflation of statistical disparity with 
unlawful discrimination, untethered from the evidentiary standards the 
law requires.
    Other commenters defended the E.O. 11246 affirmative action 
regulations by denying that race- and sex-based employment goals could 
encourage race- or sex-based decision-making. For example, one 
employment attorney asserted that the Department ``completely 
misconstrues'' its race-based placement goals, explaining that they are 
intended only to identify and remove barriers, rather than act as race-
based numeric goals. The joint comment of the National Women's Law 
Center and several other civil rights and worker rights organizations 
(hereinafter collectively referred to as ``NWLC'') similarly argued 
that ``the only requirement is to identify gaps between availability 
and utilization, and take steps to understand any barriers causing 
those gaps.'' These commenters emphasized that the regulations state 
that goal-setting requirements may not be used to justify quotas or 
explicit preferences based on race or sex.
    The Department acknowledges that it previously revised the 
regulations governing nonconstruction contractors to include an express 
disclaimer that placement goals do not justify quotas or 
discrimination. See 41 CFR 60-2.16(e) and 41 CFR 60-4.3(a)(10). But the 
same regulations also expressly require the consideration of race and 
sex in employment practices through the establishment of race- and sex-
based goals and the obligation to undertake efforts to meet them. In 
these circumstances, the Department concludes that, as a practical 
matter, the regulations require race- and sex-conscious employment 
decision-making.
    Disclaimers do not alter the underlying premise of the regulations 
that, absent discrimination, ``over time a contractor's workforce, 
generally, will reflect the gender, racial and ethnic profile of the 
labor pools from which the contractor recruits and selects,'' 41 CFR 
60-2.10(a)(1), which, if left unqualified, discounts ``innocent 
causes'' that may lead to disparities. Watson, 487 U.S. at 992. Nor 
does the disclaimer affect the structure of the regulatory framework, 
which requires contractors to classify employees and applicants by race 
and sex; to compare those classifications to external demographic 
benchmarks; to establish numerical goals where race or sex disparities 
are identified; and to implement ``action-oriented programs'' to 
address ``underutilization.'' See, e.g., 41 CFR 60-2.10(a)(1) 
(requiring nonconstruction contractors to ``address [the] 
underutilization'' of groups based on race or sex); see also 41 CFR 60-
4.3(a) (requiring construction contractors to consider utilization 
based on minority groups in AAPs). Through this regulatory scheme, `` 
`[a]ffirmative action' was . . . decisively transformed into a 
numerical concept, whether called `goals' or `quotas.' '' Thomas 
Sowell, ``Civil Rights: Rhetoric and Reality'' 41 (1984).
    ``The inevitable focus on statistics in disparate impact cases 
could put undue pressure on employers to adopt inappropriate 
prophylactic measures.'' Watson, 487 U.S. at 992. OFCCP's reliance on 
statistical disparities and numerical goals have encouraged some 
employers to discriminate. Judge Silberman, for instance, expressed 
regret regarding the structure of OFCCP's affirmative action 
regulations, which he helped establish during his tenure as Solicitor 
of Labor and Undersecretary of Labor, observing that ``[o]ur use of 
numerical standards in pursuit of equal opportunity has led ineluctably 
to the very quotas guaranteeing equal results that we initially wished 
to avoid.'' ``The Road to Racial Quotas,'' Wall Street Journal (Aug. 
11, 1977).
    Although placement and participation goals are not denominated as 
quotas, they function as numerical targets that contractors must 
pursue. Contractors were at risk that OFCCP might subject them to 
intrusive and costly investigations and enforcement proceedings if they 
failed to make sufficient progress toward meeting their goals. In 
practical operation, as American First Legal recognized, ``the existing 
regulatory infrastructure requires employers to take into account race 
and sex'' when making employment decisions with the aim of correcting 
statistical disparities. Put another way, the regulations implementing 
E.O. 11246 are self-contradictory. In 2000, OFCCP added 41 CFR 60-2.16, 
which ostensibly prohibits quotas and prohibits discrimination based on 
race, sex, and other protected characteristics. Government Contractors; 
Affirmative Action Requirements, 60 FR 68022, 68046 (Nov. 13, 2000). 
Yet, the requirements that form the bulk of parts 60-2 and 60-4 
actively induce employers to treat the goals as quotas and to take 
affirmative action that constitutes discrimination based on race and 
sex.
    Having considered the comments, the Department concludes that the 
affirmative action requirements at issue extend beyond the removal of 
barriers to equal employment opportunity. They instead establish a 
framework of race- and sex-based workforce classification, demographic 
benchmarking, and numerical goal-setting that requires contractors to 
engage in sustained race-conscious analysis in employment practices.
2. Equal Protection Principles
    Several commenters agreed with the Department that OFCCP's race-
based affirmative action regulations raise serious constitutional 
equal-protection concerns and are vulnerable to legal challenge, 
particularly in light of the Supreme Court's recent decision in SFFA, 
600 U.S. at 181. See 90 FR 28474.
    Citing Bolling v. Sharpe, 347 U.S. 497, 500 (1954), the state 
attorneys general and PLF noted that the Fifth Amendment's Due Process 
Clause applies the principles of equal protection to the Federal 
Government and argued that the regulations cannot be reconciled with 
those principles. The regulations, the state attorneys general 
asserted, require or incentivize the use of race and sex in employment 
decisions, use racial classifications that trigger strict scrutiny, and 
lack a logical endpoint. They emphasized that, like the admissions 
programs invalidated in SFFA, the regulations encourage race-conscious 
employment decision-making aimed at achieving predetermined numeric 
benchmarks and are not narrowly tailored to remedy specific acts of 
past discrimination by the entities in question against the individuals 
receiving the benefits of those measures. PLF and America First Legal 
similarly contended that the Constitution's equal-protection guarantee 
prohibits the Federal Government from conditioning contracting 
eligibility on race- or sex-based employment practices, and that SFFA 
reinforces the longstanding principle that government must treat 
individuals as individuals rather than as members of race- or sex-based 
classes. Independent Women and the ACR Project likewise supported 
rescission, asserting that race- and sex-based placement goals and 
related compliance mechanisms operate in practice as de facto quotas 
and pressure contractors to depart from merit-based hiring.
    Other commenters responded that the Department misconstrued SFFA 
because

[[Page 54450]]

that decision arose in the narrow context of college admissions, not 
employment or Federal contracting. For example, the National 
Partnership for Women & Families (NPWF) asserted that ``the decision in 
SFFA applies only to race-conscious decision-making in institutions of 
higher education,'' and the Lawyers' Committee for Civil Rights Under 
Law (Lawyers' Committee) argued that SFFA ``has no bearing on the 
affirmative action programs adopted by Federal contractors under E.O. 
11246 and its implementing regulations,'' which it characterized as 
``clearly distinguishable from the race-based admissions programs in 
that case.''
    The Department agrees that SFFA arose in the context of college 
admissions, the decision rests on longstanding and enduring equal-
protection principles that predate and extend well beyond the 
admissions context, confirming race-based governmental decision-making 
is presumptively invalid absent an extremely narrow justification. 
Indeed, the Supreme Court expressly relied on SFFA in the context of 
the Voting Rights Act to reiterate that `` `the Constitution almost 
never permits the Federal Government or a State to discriminate on the 
basis of race.' '' Louisiana v. Callais, 146 S. Ct. 1131, 1152 (2026) 
(quoting SFFA, 600 U.S. at 207). That is because `` `[d]istinctions 
between citizens solely because of their ancestry are by their very 
nature odious to a free people whose institutions are founded upon the 
doctrine of equality.' '' Id. at 1153 (quoting SFFA, 600 U.S. at 208). 
As Chief Justice Roberts explained nearly twenty years ago: ``The way 
to stop discrimination on the basis of race is to stop discriminating 
on the basis of race.'' Parents Involved in Cmty. Schs. v. Seattle Sch. 
Dist. No. 1, 551 U.S. 701, 748 (2007). In fact, the NPRM cited SFFA 
precisely to reaffirm those bedrock equal protection principles.
    SFFA struck down race-conscious admissions policies as incompatible 
with ``the `core purpose' of the Equal Protection Clause: `do[ing] away 
with all governmentally imposed discrimination based on race.' '' 600 
U.S. at 206 (quoting Palmore v. Sidoti, 466 U.S. 429, 432 (1984)). See 
also Strauder v. West Virginia, 100 U.S. (10 Otto) 303, 310 (1879) (The 
Fourteenth Amendment's ``aim was against discrimination because of race 
or color.''). That principle applies to Federal contracting no less 
than to higher education. Indeed, the Supreme Court has long held that 
racial classifications employed in Federal contracting are subject to 
the same equal-protection constraints. For example, in Adarand 
Constructors, Inc. v. Pe[ntilde]a, 515 U.S. 200, 227 (1995), which SFFA 
cites as authority,\20\ the Court held that strict scrutiny applies to 
the Department of Transportation contracting program that employed 
racial or ethnic criteria.
---------------------------------------------------------------------------

    \20\ 600 U.S. at 206.
---------------------------------------------------------------------------

    Under the Constitution, ``[g]overnment policies that classify 
people by race are presumptively invalid.'' Vitolo v. Guzman, 999 F.3d 
353, 360 (6th Cir. 2021) (citing U.S. Const. amend. XIV; Adarand, 515 
U.S. at 234). Arguing that the Department's characterization of SFFA is 
inaccurate and unsupported, a coalition of ninety organizations 
asserted that ``[t]he Court recognized that race-based action may be 
permissible in certain circumstances.'' But those circumstances are 
extremely narrow: a racial classification must survive strict scrutiny, 
meaning it must be narrowly tailored to achieve a compelling 
governmental interest. SFFA, 600 U.S. at 206. Relying on SFFA, the 
Supreme Court in Callais explained that racial classification 
``triggers strict scrutiny, and [the Court's] precedents have 
identified `only two compelling interests' that can satisfy that 
standard.'' 146 S. Ct. at 1152 (quoting SFFA, 600 U.S. at 207). The 
first is ``avoiding imminent and serious risks to human safety in 
prisons,'' id., which plainly has no application here. The second is 
``remediating specific, identified instances of past discrimination 
that violated the Constitution or a statute,'' id., which also does not 
apply, as explained below.
    Sex-based classifications likewise are ``presumptively invalid'' 
and may be sustained only if they satisfy intermediate scrutiny--they 
must serve an important governmental objective and are substantially 
related to the achievement of that objective. Vitolo, 999 F.3d at 364. 
For the reasons explained below, the Department concludes that the 
race- and sex-based affirmative action regulations in 41 CFR parts 60-2 
and 60-4 are unconstitutional under these standards and therefore 
should be rescinded.
a. OFCCP's Race-Based Affirmative Action Regulations Are 
Unconstitutional
    The state attorneys general, PLF, America First Legal, and other 
commenters argued that OFCCP's race-based affirmative action 
regulations constitute racial classifications that fail strict scrutiny 
and therefore must be rescinded. No commenter disputed that these 
regulations either classify individuals on the basis of race for 
purposes of equal-protection jurisprudence or are subject to strict 
scrutiny.
i. Race-Based Affirmative Action Regulations Trigger Strict Scrutiny
    The Department concludes that the affirmative action regulations 
that require contractors to set placement goals where minority 
underutilization occurs and then make good faith efforts to address 
that underutilization create racial classifications that trigger strict 
scrutiny under settled equal-protection principles. Long before SFFA, 
courts repeatedly held that governmental policies pressuring or 
encouraging regulated entities to consider race in hiring, promotion, 
assignment, or other employment decisions constitute racial 
classifications attributable to the government. See, e.g., Monterey 
Mech. Co. v. Wilson, 125 F.3d 702, 710-13 (9th Cir. 1997); Lutheran 
Church-Mo. Synod v. FCC, 141 F.3d 344, 351-54 (D.C. Cir. 1998); MD/DC/
DE Broadcasters Ass'n v. FCC, 236 F.3d 13, 19-20 (D.C. Cir. 2001).
    Although some commenters correctly note that 41 CFR 60-2.16(e) 
disclaims the use of placement goals as ``rigid and inflexible 
quotas,'' that disclaimer is beside the point. The relevant inquiry is 
whether the regulatory scheme encourages, induces, or effectively 
requires employment decisions because of race. See Anderson v. Martin, 
375 U.S. 399, 402 (1964). Where such pressure exists, courts treat the 
regulatory framework itself as a racial classification subject to 
strict scrutiny. Lutheran Church, 141 F.3d at 352-53; MD/DC/DE 
Broadcasters Ass'n, 236 F.3d at 19-20. And that is precisely what the 
regulatory framework does. The rules require ``goals'' not ``quotas,'' 
but for many regulated contractors, the two are synonymous. A quota, as 
the word is commonly used (particularly in sales), does not necessarily 
have a ``rigid and inflexible'' connotation. For equal protection 
purposes, it does not matter ``whether a government hiring program 
imposes hard quotas, soft quotas, or goals. Any one of these techniques 
induces an employer to hire with an eye toward meeting the numerical 
target. As such, they can and surely will result in individuals being 
granted a preference because of their race.'' Lutheran Church, 141 F.3d 
at 354.
    The placement goal framework in part 60-2 exerts such pressure in 
at least two ways. First, OFCCP considers a contractor's 
underutilization of minorities when conducting compliance reviews of 
contractors. See 41 CFR 60-2.16(e). If a contractor does not exhibit

[[Page 54451]]

underutilization, there is no predicate for finding a failure to 
undertake ``good faith efforts'' to remedy it; conversely, where 
underutilization is identified, the contractor's good faith efforts are 
subject to scrutiny and potential enforcement. In this way, the 
presence or absence of underutilization effectively determines exposure 
to liability. Since fiscal year 2020, OFCCP issued over 40 notices of 
violations against contractors for either failing to conduct the 
utilization analysis or failing to ``execute action-oriented programs'' 
to address underutilization of minorities. Contractors were subjected 
to these violations even where OFCCP did not allege that any 
underutilization was due to discrimination. The threat of enforcement 
based on knowledge of a contractor's underutilization creates a strong 
incentive to meet numerical race-based goals, thereby inducing race-
based decision-making. An attorney who has represented many contractors 
commented, ``I have observed first-hand several dozen major 
corporations just `hitting the numbers' by either setting hiring 
percentages at either their applicant flow percentages or the 
percentage availability they calculated in their AAP [for minorities 
and females].''
    Courts have consistently recognized that the prospect of government 
enforcement exerts coercive pressure sufficient to influence regulated 
conduct. Lutheran Church, 141 F.3d at 353 (``No rational firm--
particularly one holding a government-issued license--welcomes a 
government audit.''); MD/DC/DE Broadcasters Ass'n, 236 F.3d at 19-20 
(``Investigation by the licensing authority is a powerful threat, 
almost guaranteed to induce the desired conduct.'').
    Second, the regulations require contractors to undertake ``good-
faith efforts'' and other affirmative actions to address minority 
underutilization. Requirements to take action to meet race-specific 
employment targets likewise encourage contractors to consider race and 
therefore trigger strict scrutiny. See Monterey Mech., 125 F.3d at 710-
13.
    The constitutional concerns are even more pronounced with respect 
to construction contractors' participation goal requirements under part 
60-4. Unlike placement goals, there is no prohibition against treating 
participation goals as inflexible quotas in the regulatory text. To the 
contrary, construction contractors are expressly ``expected to make 
substantially uniform progress in meeting . . . [their participation] 
goals.'' 41 CFR 60-4.3(a)(4). Section 60-4.2(d)(2) further requires 
that hours worked by minorities and women be ``substantially uniform 
throughout the length of the contract'' and that contractors make good-
faith efforts to employ minorities and women evenly across projects. 
These provisions directly encourage contractors to monitor and manage 
staffing decisions on the basis of race, even though contractors were 
ostensibly prohibited from ``us[ing] the goals and timetables or 
affirmative action standards to discriminate'' on that and other bases. 
41 CFR 60-4.3(a)(10). These requirements operate in a context where 
compliance directly affects a contractor's eligibility for Federal work 
and exposure to enforcement action, including the potential loss of 
existing or future contract revenue. Such financial incentive structure 
can exert significant pressure on contractors to manage staffing 
decisions on the basis of race.
    In addition, the affirmative action steps mandated by OFCCP's 
construction equal opportunity clause are facially race-based. The 
regulations require contractors to take specific preferential actions 
with respect to minority applicants or employees because of their 
race--or, here, grouping of their races as ``minority'' races--without 
imposing corresponding obligations with respect to non-minority 
individuals. See 41 CFR 60-4.3(a)(7). As one example of mandatory 
preferential disparate treatment, construction contractors must 
annually conduct ``an inventory and evaluation at least of all minority 
and female personnel for promotional opportunities and encourage these 
employees to seek or to prepare for, through appropriate training, 
etc., such opportunities.'' 41 CFR 60-4.3(a)(7)(l). By contrast, there 
is no requirement to evaluate promotion opportunities for non-minority 
males, nor to encourage them to seek or prepare for opportunities 
through training. This inequality persists despite the Supreme Court's 
affirmation that equal protection applies ``with equal force regardless 
of `the race of those burdened or benefited by a particular 
classification.' '' Miller v. Johnson, 515 U.S. 900, 904 (1995) 
(quoting Richmond v. J.A. Croson Co., 488 U.S. 469, 494 (1989)).
    Ultimately, both the placement- and participation-goal frameworks 
rest on the premise that nondiscriminatory employment practices should 
yield workforces that approach proportional representation based on the 
labor pool, and that deviations from such representation warrant 
correction. Part 60-2 states that, absent discrimination, a 
contractor's workforce is expected to ``reflect the gender, racial, and 
ethnic profile of the labor pools from which [it] recruits and 
selects.'' 41 CFR 60-2.10(a)(1). Part 60-4 similarly defines 
participation goals as the percentages of hours of employment that a 
contractor ``should reasonably be able to achieve.'' 41 CFR 60-
4.3(a)(4). As discussed above in section III(B)(1), there are often 
benign reasons for members of certain racial or ethnic groups being 
over- or under-represented in a particular line of work. And courts 
have squarely rejected the proportional representation premise as 
constitutionally suspect. In Lutheran Church, the D.C. Circuit 
explained that regulatory schemes ``built on the notion that 
[employers] should aspire to a workforce that attains, or at least 
approaches, proportional representation'' obligate employers ``to grant 
some degree of preference to minorities in hiring'' and, therefore, 
trigger strict scrutiny. 141 F.3d at 352.
ii. Race-Based Affirmative Action Regulations Fail Strict Scrutiny
    OFCCP's race-based affirmative action regulations cannot survive 
strict scrutiny. The regulations do not serve a compelling governmental 
interest, and even if such an interest could be identified, they are 
not narrowly tailored to achieve that interest.
    As the state attorneys general explained, the only potentially 
relevant compelling interest recognized by the Supreme Court in this 
context is the remediation of identified occurrences of past 
discrimination. See Croson, 488 U.S. at 497.\21\ Importantly, 
generalized assertions of societal or industry-wide discrimination are 
not enough; there must be specific instances of past intentional 
discrimination in which the Federal Government itself was an active or 
passive participant. Id. at 498-500; see also Vitolo, 999 F.3d at 361.
---------------------------------------------------------------------------

    \21\ The Court has acknowledged rationales other than remedying 
past discrimination, but they were strictly limited to the higher 
education context in which they arose. See, e.g., Grutter v. 
Bollinger, 539 U.S. 306, 328-33 (2003). And even so, those 
rationales have since been severely limited. See SFFA, 600 U.S. at 
214-18.
---------------------------------------------------------------------------

    For the Department to impose a blanket requirement that all 
contractors nationwide address a general underutilization of minorities 
through race-based employment goals and other affirmative measures, the 
Department would need to identify concomitant discrimination--that is 
systematic, nationwide discrimination by all contractors nationwide 
against all minorities in which the Federal Government itself was an 
active or passive participant. See Wygant v. Jackson Bd. of Educ., 476 
U.S. 267, 274

[[Page 54452]]

(1986). The Department cannot meet this exacting standard. The 
rulemaking records underlying OFCCP's race-based placement and 
participation goals do not identify any discrete, contemporaneous 
instances of intentional discrimination by contractors, much less all 
contractors to which OFCCP's goals apply, in which the Federal 
Government participated or acquiesced.\22\ See Part 60-2 Affirmative 
Action Programs, 35 FR 2586 (Feb. 5, 1970).
---------------------------------------------------------------------------

    \22\ The Federal Government has prohibited contractors from race 
discrimination since President Franklin Roosevelt did so relying on 
war legislation. See E.O. 9001, 6 FR 6787 (citing Act of Dec. 18, 
1941, Sec. 593, Public Law 77-354, 55 Stat. 838).
---------------------------------------------------------------------------

    Even assuming the Department could demonstrate widespread Federal 
governmental participation in discrimination that could be remedied 
with race-motivated policies, the E.O. 11246 regulations fail the 
narrow tailoring requirement for several reasons. First, narrow 
tailoring minimally requires serious, good-faith consideration of 
workable race-neutral alternatives. Grutter v. Bollinger, 539 U.S. 306, 
339 (2003); Croson, 488 U.S. at 507. The rulemaking records underlying 
parts 60-2 and 60-4 reflect no assessment whatsoever of race-neutral 
alternatives to race-based affirmative action requirements. Second, 
race-conscious remedial programs must be limited in duration or subject 
to periodic review to ensure that they do not outlast their 
justification. See W. States Paving Co. v. Wash. State Dep't of 
Transp., 407 F.3d 983, 994 (9th Cir. 2005). None of OFCCP's race-based 
affirmative action requirements is limited in duration or subject to 
meaningful periodic review. Third, and especially problematic, the 
regulations apply collectively to all minority groups in the aggregate, 
regardless of whether a particular group was harmed by instances of 
discrimination or even experiences underutilization. By permitting 
race-conscious requirements untethered to evidence of discrimination 
affecting particular groups, the regulations lack the narrow tailoring 
required by equal-protection principles. See Rothe Dev. Corp. v. Dep't 
of Defense, 545 F.3d 1023, 1036 (Fed. Cir. 2008) (citing Croson, 488 
U.S. at 506).
    Under OFCCP's regulations, individuals of different races are 
treated interchangeably, as long as the races qualify as ``minority'' 
in the view of the agency. Paradoxically, even a contractor with a 
history of discrimination against black workers could ``remedy'' that 
discrimination in the eyes of OFCCP by hiring individuals of other 
minority races. Regardless, the interchangeability of individuals of 
different minority races under the regulations significantly broadens--
not narrows--their scope. Ultimately, that breadth as well as the 
permanence of the affirmative action regulations related to E.O. 
11246--as noted above, they apply across all industries, to all 
minority groups, and without temporal limitation--preclude a finding of 
narrow tailoring.
    The overbreadth of the affirmative action requirements in parts 60-
2 and 60-4 is underscored when compared against targeted remedial 
orders that preceded them. For example, the Third Circuit affirmed the 
1969 Philadelphia Plan, an affirmative action order that applied only 
to six construction trades in the Philadelphia area and was based on 
the Secretary of Labor's finding that race-conscious hiring goals were 
necessary to remedy ``obvious underrepresentation [that] was due to the 
exclusionary practices of the unions'' in those specific trades. 
Contractors Ass'n of E. Pa. v. Sec'y of Labor, 442 F.2d 159, 171-72 
(1971).\23\ By contrast, parts 60-2 and 60-4 require across-the-board, 
race-based employment practices on contractors nationwide, without 
regard to industry, trade, geographic location, history, or specific 
findings of discriminatory conduct. This stark contrast illustrates the 
absence of narrow tailoring in the current regulatory regime and 
reinforces the Department's conclusion that the regulations cannot be 
justified as remedial measures under equal-protection principles.
---------------------------------------------------------------------------

    \23\ The Philadelphia Plan was not challenged on equal 
protection grounds but rather on statutory grounds. It is unclear 
whether even this narrower race-based remediation plan would survive 
strict scrutiny, since there was neither evidence presented showing 
that the government participated--even passively--in the unions' 
discrimination, nor that race-neutral alternative was ever given 
good-faith consideration.
---------------------------------------------------------------------------

    OFCCP's race-based affirmative action regulations are unlikely to 
satisfy the compelling-interest requirement and definitively fail the 
narrow-tailoring requirement. On these bases alone, the Department 
concludes that the regulations cannot survive strict scrutiny and 
should be rescinded.
b. OFCCP's Sex-Based Affirmative Action Regulations Are Likely 
Unconstitutional
    The Department further concludes that the affirmative action 
requirements in 41 CFR parts 60-2 and 60-4 are sex-conscious 
regulations that are unlikely to satisfy intermediate scrutiny, which 
requires that the classification serve an important governmental 
objective and be substantially related to the achievement of that 
objective. Craig v. Boren, 429 U.S. 190, 197 (1976).
    The Supreme Court has explained that ``[i]n limited circumstances, 
a gender-based classification favoring one sex can be justified if it 
intentionally and directly assists members of the sex that is 
disproportionately burdened.'' Miss. Univ. for Women v. Hogan, 458 U.S. 
718, 728 (1982). As with race-based classifications, remedying specific 
instances of past discrimination may constitute a valid governmental 
objective. However, ``general claims of societal discrimination'' are 
insufficient. The government must show that the favored sex ``actually 
suffer[ed] a disadvantage'' caused by discrimination in a particular 
field or context that the policy is designed to remedy. Id. at 727-29.
    The Department does not dispute that women have at times 
experienced discrimination in certain trades or occupations. The 
constitutional problem is not the existence of discrimination in some 
contexts, but the absence of any findings that the sex-conscious 
requirements in parts 60-2 and 60-4 are tied to discrimination by 
particular employers or even to discrimination within specific 
industries, occupations, trades, or geographic areas. The rulemaking 
records for part 60-2 do not contain findings of sex-based 
discrimination in specific nonconstruction trades. OFCCP's first 
issuance of goals and timetables for the construction industry contains 
a discussion of the state of female employment in the industry, citing 
comparative workforce participation data, testimony presented at fact-
finding hearings, studies indicating that placement goals would 
increase the percentage of women interested in applying for 
construction jobs and the impact of a Maritime Administration goals 
program on the increased representation of women in that workforce. The 
discussion did not, however, include court findings or other concrete 
evidence of proven systemic discrimination against women across the 
industry. See Goals and Timetables for Female and Minority 
Participation in the Construction Industry, 43 FR 14888, 14892-93 (Apr. 
7, 1978). Thus, these findings were not sufficient to justify imposing 
uniform, sex-conscious requirements across all covered industries and 
locations nationwide. Vitolo, 999 F.3d at 365.
    Instead, the structure and text of the regulations indicate that 
their objective is not the remediation of identified, trade-specific 
discrimination but the

[[Page 54453]]

reduction of disparities between a contractor's workforce and the 
available labor pool.\24\ Part 60-2 expressly states that a 
contractor's workforce should ``reflect the gender . . . profile of the 
labor pools from which [it] recruits and selects.'' 41 CFR 60-
2.10(a)(1). That formulation reflects a sex-balancing objective rather 
than a remedial one. But statistical disparities between workforce 
composition and labor-market availability, standing alone, are 
insufficient to demonstrate an important governmental objective. See 
Vitolo, 999 F.3d at 364 (citing Craig, 429 U.S. at 200-04). Absent 
evidence that women suffered intentional discrimination in each of the 
specific trades or occupations subject to regulation, sex-based 
classifications cannot be justified as remedial measures. Id. at 365 
(``Without proof of intentional discrimination against women, a policy 
that discriminates on the basis of sex cannot serve a valid 
governmental objective.'').
---------------------------------------------------------------------------

    \24\ NNU made the same admission, commenting, ``The sole 
determining factor is whether disparities exist.''
---------------------------------------------------------------------------

    Moreover, the means employed by parts 60-2 and 60-4 likely are not 
substantially related to the objective of remedying past 
discrimination, at least in the main. The regulations in part 60-2 
apply broadly across industries and occupations without regard to 
whether discrimination occurred in a particular sector, job group, or 
geographic area. Although the regulations in part 60-4 are limited to 
construction, OFCCP established a uniform 6.9 percent participation 
goal for women nationwide, without accounting for regional variation, 
differences among construction trades, or evidence of past 
discrimination in particular local labor markets. See Construction 
Contractors, Affirmative Action Requirements, 45 FR 85750, 85751 (Dec. 
30, 1980).\25\ The sex- and race-based placement goals for construction 
contractors were set by notices in the Federal Register in 1978. 43 FR 
14888. Race-based goals were updated in 1980, while sex-based goals 
were never updated, even though industry practices have changed 
substantially.
---------------------------------------------------------------------------

    \25\ The 1978 Federal Register Notice establishing the female 
goal explained that OFCCP took the nationwide approach because the 
female representation level in the construction industry was so low 
that Census data did not allow for variations based on locality. 43 
FR 14888, 14899.
---------------------------------------------------------------------------

    By imposing a single nationwide participation goal untethered to 
specific findings of sex-based discrimination in particular trades or 
regions, the regulations reflect a generalized sex-balancing approach 
rather than a remedial program that addresses identified 
discrimination.
    The types of sex-based classifications upheld under intermediate 
scrutiny are materially different from the broad, industry-wide 
requirements imposed by these regulations. For example, in Schlesinger 
v. Ballard, 419 U.S. 498 (1975), the Court upheld a statutory provision 
that directly compensated for specific legal barriers to advancement 
faced by female naval officers. By contrast, the regulations here 
impose uniform, sex-conscious requirements across industries and 
locations without findings that women face comparable, legally imposed 
barriers in the covered fields or that the requirements are calibrated 
to remedy such barriers.
    While intermediate scrutiny is less demanding than strict scrutiny, 
the Department concludes that the sex-based affirmative action 
requirements in parts 60-2 and 60-4 raise serious constitutional 
concerns and are unlikely to survive constitutional scrutiny.
3. Federal Civil Rights Law
a. Conflict With Title VII of the 1964 Civil Rights Act
    Some commenters, including the CRF and America First Legal, agreed 
with the Department's concern that OFCCP's race-based and sex-based 
affirmative action regulations conflict with Federal civil rights law--
specifically Title VII of the Civil Rights Act of 1964--because they 
require contractors to address underutilization of minorities and 
women, but not other groups. See 90 FR at 28475 (citing Ames v. Ohio 
Dep't of Youth Servs., 605 U.S. 303 (2025)). Other commenters 
disagreed. NNU contended that the proposed rescission is ``in direct 
conflict with Title VII,'' but did not explain how. The ACR Project 
argued that the Department ``seriously understates'' the conflict 
because the E.O. 11246 affirmative action regulations ``require 
employers to violate the Civil Rights Act'' and urged the Department to 
acknowledge this conflict as an additional justification for 
rescission. Upon careful consideration of these comments, the 
Department generally agrees with the ACR Project and concludes that 
OFCCP's affirmative action regulations compel contractors to adopt 
employment practices that conflict with Title VII.
    The Lawyers' Committee asserted that OFCCP has historically 
interpreted E.O. 11246's nondiscrimination provisions to be analogous 
to and consistent with Title VII. That assertion is largely correct 
with respect to OFCCP's nondiscrimination regulations at 41 CFR parts 
60-1, 60-20, and 60-50. But the affirmative action regulations at parts 
60-2 and 60-4 go further. They require contractors not only to 
establish employment goals for minorities and women but also to 
undertake specific employment actions with respect to those groups to 
meet those ``goals.'' These requirements conflict with the text of 
Title VII, which generally prohibits covered employers from making 
employment decisions because of an individual's race or sex. Title VII 
also makes it an unlawful employment practice to ``classify'' employees 
or applicants in a manner that deprives or tends to deprive individuals 
of employment opportunities because of race, color, sex, or national 
origin. 42 U.S.C. 2000e-2(a). The Civil Rights Act of 1991 broadened 
this prohibition by providing that an unlawful employment practice is 
established when race, color, religion, sex, or national origin was 
even ``a motivating factor'' for an employment practice, even if other 
factors also motivated, or even were the primary reasons for, the 
decision. 42 U.S.C. 2000e-2(m). The statutory text of Title VII thus 
adopts a broad prohibition on race- and sex-based employment practices 
that, on its face, bars affirmative action measures to meet numeric 
goals based on those characteristics.
    As several commenters noted, the Supreme Court has construed Title 
VII to permit race- or sex-conscious affirmative action in extremely 
narrow circumstances. See United Steelworkers v. Weber, 443 U.S. 193 
(1979); Johnson v. Transp. Agency, Santa Clara Cnty, Cal., 480 U.S. 616 
(1987). Subsequent Supreme Court decisions call into question the 
continued viability of the Weber-Johnson framework. See, e.g., Callais, 
146 S. Ct. at 1152-53; Ames, 605 U.S. at 308-310; SFFA, 600 U.S. at 
181; and Ricci v. DeStefano, 557 U.S. 557, 579 (2009). However, even 
assuming that the Weber-Johnson framework remains good law and applies, 
the E.O. 11246 affirmative action regulations would still be 
inconsistent with Title VII.\26\
---------------------------------------------------------------------------

    \26\ The state attorneys general criticize the Weber-Johnson 
framework as a judge-made doctrine that lacks a textual basis in 
Title VII and that would be rejected by the current Supreme Court. 
See Johnson, 480 U.S. at 647 (O'Connor., J. concurring) (agreeing 
with Justice Scalia's dissent that Title VII ``has been interpreted 
by Weber and succeeding cases to permit what its language read 
literally would prohibit.''). The Supreme Court more recently 
explained when interpreting Title VII that ``[w]hen the express 
terms of a statute give us one answer and extratextual 
considerations suggest another, it's no contest. Only the written 
word is the law, and all persons are entitled to its benefit.'' 
Bostock v. Clayton County, 590 U.S. 644, 653 (2020). While the 
Weber-Johnson framework is atextual and its continued viability is 
questionable, the Department assumes that the framework remains 
controlling Supreme Court precedent, and therefore it applies the 
framework in assessing the compatibility of the E.O. 11246 
affirmative action regulations with Title VII.

---------------------------------------------------------------------------

[[Page 54454]]

    Under the Weber-Johnson framework, an employer may voluntarily 
adopt a race- or sex-conscious measure to address a manifest imbalance 
in traditionally segregated job categories, provided that the measure 
is remedial in purpose, temporary in duration, and does not employ 
quotas or inflexible goals or unnecessarily trammel the interests of 
non-beneficiaries. Weber, 443 U.S. at 208; Johnson, 480 U.S. at 638. 
Such programs must be designed to eliminate the effects of past 
discrimination or segregation, not to maintain racial or gender balance 
for its own sake. Johnson, 480 U.S. at 639-40. As the Eighth Circuit 
explained: ``An affirmative action policy is valid [under Title VII] if 
the policy is remedial and narrowly tailored to meet the goal of 
remedying the effects of past discrimination.'' Humphries v. Pulaski 
Cnty. Special Sch. Dist., 580 F.3d 688, 695 (8th Cir. 2009). It is 
often difficult for an employer to establish compliance with the strict 
limitations of Weber and Johnson; those who attempt such a path and 
fail necessarily violate Title VII with the practice in question.\27\
---------------------------------------------------------------------------

    \27\ The EEOC has rescinded its guidelines at 29 CFR 1608.5 
which provided that if a Title VII complaint is based on action 
taken pursuant to an approved E.O. 11246 AAP, or if the approved AAP 
was used as the justification for the challenged action, the EEOC 
would issue a determination of no reasonable cause, in recognition 
of the ``similar purposes'' of both laws. See 91 FR 40879 (July 6, 
2026).
---------------------------------------------------------------------------

    To comply with the E.O. 11246 affirmative action regulations, a 
contractor must establish race- and sex-based employment goals and take 
other race- and sex-conscious employment actions. The Department does 
not believe such practices would fit within the Weber-Johnson 
framework--and certainly not generally across contractors. First, they 
are not voluntary: contractors are required, as a condition of 
obtaining and retaining Federal contracts, to adopt and implement 
OFCCP's race- and sex-based affirmative action requirements.\28\ 
Second, they are not remedial: the regulations require contractors to 
undertake good faith efforts to meet, achieve, or approach proportional 
representation in terms of race and sex, not to specifically remedy 
manifest imbalances in a traditionally segregated job category. Third, 
they are not temporary: they have existed for over half a century, and 
unless rescinded, contractors would continue to be subject to these 
regulations on an indefinite basis. Fourth, the regulations contain 
rigid goals. While placement goals for nonconstruction contractors must 
not be rigid quotas, a similar prohibition is missing from 
participation goals for construction contractors. Instead, for example, 
construction contractors must ``make substantially uniform progress in 
meeting its goals'' and ``where possible, will assign two or more women 
to each construction project.'' See 41 CFR 60-4.3(a)(4) and (7). The 
Department is not aware of any authority where a court has upheld a 
similarly broad arrangement under the Weber-Johnson framework.
---------------------------------------------------------------------------

    \28\ Justice Rehnquist's dissent in Weber notes that the 
``voluntary'' action upheld by the majority may have been adopted in 
response to pressure from the Office of Federal Contract Compliance. 
See id. at 222-23 & n.2 (Rehnquist, J., dissenting). But the 
majority opinion made no mention of that fact when deeming the 
action to be ``private'' and ``voluntary.'' Id. at 208. In any 
event, even assuming that actions taken for the express purpose to 
comply with OFCCP's binding regulations could somehow be considered 
``voluntary'' within the meaning of the Weber-Johnson framework, 
those regulations do not satisfy the framework's other requirements, 
including that any race- or sex-conscious measure be narrowly 
tailored to remedy a manifest imbalance in a traditionally 
segregated job category and be temporary in nature.
---------------------------------------------------------------------------

    ``[T]he existence of an affirmative action plan . . . when combined 
with evidence that the plan was followed in an employment decision is 
sufficient to constitute direct evidence of unlawful discrimination 
unless the plan is valid.'' Frank v. Xerox Corp., 347 F.3d 130, 137 
(5th Cir. 2003) (quoting Bass v. Bd. of Cnty. Comm'rs, 256 F.3d 1095, 
1110 (11th Cir. 2001)).\29\ Many employment actions taken to comply 
with the E.O. 11246 affirmative action regulations would not fall 
within the narrow Weber-Johnson framework and would instead constitute 
direct evidence of unlawful discrimination in violation of Title VII. 
The Department concludes that OFCCP's placement and participation goals 
and related regulatory requirements--backed by compliance evaluations 
and enforcement consequences--compel regulated employers to adopt race- 
and sex-conscious employment practices that are, in many cases, 
unlawful under Title VII.
---------------------------------------------------------------------------

    \29\ See also, e.g., McGarry v. Bd. of Cnty. Comm'rs, 175 F.3d 
1193, 1199 (10th Cir. 1999); Bass v. Bd. of Cnty. Comm'rs, 256 F.3d 
1095, 1110 (11th Cir. 2001); Humphries v. Pulaski Cnty. Special Sch. 
Dist., 580 F.3d 688, 693 (8th Cir. 2009).
---------------------------------------------------------------------------

b. Affirmative Action Regulations Conflict With Title VI of the Civil 
Rights Act
    The Department also considered the compatibility of 41 CFR part 60-
4's affirmative action requirements as applied to contractors 
performing federally assisted construction projects with Title VI of 
the Civil Rights Act of 1964, which prohibits recipients of Federal 
financial assistance from engaging in discrimination on the basis of 
race, color, or national origin. 42 U.S.C. 2000d et seq. The Supreme 
Court has long held that Title VI's nondiscrimination mandate is 
coextensive with the Equal Protection Clause. See, e.g., Regents of the 
Univ. of Cal. v. Bakke, 438 U.S. 265, 287 (1978).
    Under that framework, race-based affirmative action measures--even 
those falling short of explicit quotas--are permissible only when 
narrowly tailored to remedy identified, specific instances of past 
discrimination or, in limited contexts, to address imminent and serious 
threats to human safety. As explained above, the E.O. 11246 affirmative 
action regulations applicable to federally assisted construction 
projects would not pass this exacting test. They are not tied to 
identified instances of past discrimination by recipients of Federal 
assistance and apply broadly without regard to local conditions or 
historical findings. Accordingly, the Department also concludes that 
these regulations compel recipients of Federal financial assistance to 
engage in race-based conduct that conflicts with Title VI.
    Like the unconstitutionality of the affirmative action regulations, 
those regulations' incompatibility with Titles VI and VII of the Civil 
Rights Act supplies independent reasons for their rescission. The 
Department agrees with the conclusion of the state attorneys general 
that the regulations' ``requirements run counter to deeply rooted legal 
and moral principles enshrined in the constitutions of the United 
States and our states and state and federal civil rights laws.''

C. Lack of Statutory Authority To Maintain Regulations Implementing 
E.O. 11246

    Several commenters, including the attorneys general of 22 states, 
the EPPC, New Civil Liberties Alliance (NCLA), and the ACR Project, 
questioned the Department's statutory authority to maintain regulations 
implementing E.O. 11246. These commenters contended that, regardless of 
E.O. 11246's status, the regulations the Department proposes to rescind 
are unlawful because Congress never authorized them. They argued that 
the E.O. 11246 regulations impose legally binding affirmative action 
and nondiscrimination obligations on contractors and therefore 
constitute legislative rules requiring a clear delegation of authority 
from

[[Page 54455]]

Congress. In particular, they asserted that the Federal Property and 
Administrative Services Act of 1949, 40 U.S.C. 101-1315 (Procurement 
Act)--the only statute the Department has cited in rulemaking as 
authority for the E.O. 11246 regulations--does not provide such 
authorization.
    The state attorneys general and the EPPC invoked the major 
questions doctrine and argued that the Procurement Act's purpose of 
ensuring an economical and efficient system of procurement does not 
supply authority to impose broad employment mandates governing 
contractors' hiring and employment practices. NCLA further noted that 
the Department cited the Procurement Act as the source of authority for 
E.O. 11246 regulations only decades after the Executive Order's 
issuance, arguing that this delayed reliance undermines any claim that 
the regulations reflect a contemporaneous or longstanding 
interpretation of statutory authority. The state attorneys general and 
other commenters urged the Department to rescind the E.O. 11246 
implementing regulations not only because E.O. 11246 has been revoked, 
but also because the regulations lack statutory authorization. These 
commenters encouraged the Department to acknowledge this lack of 
authority in the final rule to clarify the limits of agency authority 
with respect to the E.O. 11246 regulations.
    No commenters defended the Procurement Act as statutory authority 
for the E.O. 11246 regulations. Several commenters suggested 
alternative sources of authority. Some commenters argued that the 
longevity of the E.O. 11246 regulations supports their statutory 
authorization. The AFL-CIO stated that generally applicable equal 
employment opportunity laws enacted by Congress require compliance with 
the regulations. NNU argued that Congress ratified the E.O. 11246 
regulatory framework through enactment of section 718 of Title VII of 
the Civil Rights Act of 1964, as amended in 1972. See 42 U.S.C. 2000e-
17.
    In light of these comments, the Department has reconsidered its 
authority to maintain the regulations implementing E.O. 11246 under the 
Procurement Act and the alternative statutory ground suggested by 
commenters. Upon review, the Department has determined that it lacks 
statutory authority for significant portions of the E.O. 11246 
regulatory framework, including its regulations requiring race- and 
sex-based affirmative action related to E.O. 11246 and authorizing 
OFCCP to seek monetary relief in E.O. 11246 administrative proceedings 
against contractors. The Department further believes that the 
Procurement Act could authorize it to require contractors to follow 
Federal nondiscrimination law--but not to seek monetary relief for 
violations in E.O. 11246 administrative proceedings.
1. The Need for Statutory Authorization
    An agency ``literally has no power to act . . . unless and until 
Congress confers power upon it.'' La. Pub. Serv. Comm'n v. FCC, 476 
U.S. 355, 374 (1986). However, the sources of congressional delegation 
for the Department's regulations implementing E.O. 11246 have never 
been clear. E.O. 11246 identifies no specific statutory delegation and 
is purported to be authorized under the ``Constitution and statutes of 
the United States.'' \30\ OFCCP's early regulations did not identify 
any specific statutory source of authority. In 1979, the Supreme Court 
recognized in Chrysler Corp. v. Brown that ``[t]he origins of the 
congressional authority for Executive Order 11246 are somewhat obscure 
and have been roundly debated by commentators and courts.'' 441 U.S. 
281, 304 (1979).
---------------------------------------------------------------------------

    \30\ See E.O. 11246.
---------------------------------------------------------------------------

    NCLA pointed out in its comment that ``Executive Order 11246 and 
the regulations promulgated pursuant to it might well be fine, if they 
did not seek to bind the conduct of anyone outside the Executive 
Branch.'' But in fact, the regulations do extend beyond the Executive 
Branch by subjecting private parties to non-contractual legally binding 
requirements and to significant monetary loss. They are enforceable 
judicially as if they had the force of law. 41 CFR 60-1.26(a), (c)-(d). 
``But in order for such regulations to have the `force and effect of 
law,' '' the Supreme Court explained when considering OFCCP's E.O. 
11246 authority, ``it is necessary to establish a nexus between the 
regulations and some delegation of the requisite legislative authority 
by Congress.'' Chrysler Corp., 441 U.S. at 304.
    In Chrysler, the Supreme Court explained that ``[t]he legislative 
power of the United States is vested in the Congress, and the exercise 
of quasi-legislative authority by governmental departments and 
agencies''--such as the E.O. 11246 regulations at issue--``must be 
rooted in a grant of such power by the Congress and subject to 
limitations which that body imposes.'' Id. at 302. Applying that 
principle, the Court found no authority for OFCCP's regulations 
providing for public disclosure of information from its records in any 
of the statutes identified by the Federal Government, including the 
Procurement Act, Titles VI and VII of the Civil Rights Act of 1964, and 
the Equal Opportunity Act of 1972. Id. at 304-8. With regard to the 
Procurement Act, the Court said, ``The Act explicitly authorizes 
Executive Orders `necessary to effectuate [its] provisions.' [Sec. 
486(a)]. However, nowhere in the Act is there a specific reference to 
employment discrimination.'' Id. at 304 n.34. The Court ultimately 
suggested that the Procurement Act may authorize nondiscrimination 
provisions that prohibit contractors from ``excluding from the labor 
pool available minority workmen,'' id., but held that it does not 
authorize the disclosure regulation at issue, id. at 304.
    Despite the Supreme Court's clarification in 1979 that OFCCP 
regulations must be rooted in statutory authority, the Department 
continued to promulgate regulations implementing E.O. 11246 without 
identifying any statutory basis in rulemaking documents. For example, a 
1982 rule confirming OFCCP's ability to seek back pay and other 
monetary relief in administrative proceedings against contractors 
asserted that ``the Executive Order vests OFCCP with the legal 
authority to seek back pay for victims of discrimination,'' without 
citing any statute. Government Contractors; Affirmative Action 
Requirements, 47 FR 17770, 17773 (Apr. 23, 1982).\31\ As NCLA noted, 
the Department did not identify a specific statutory source of 
authority for any regulation implementing E.O. 11246 for many 
decades.\32\ Indeed, it is our understanding that the first time OFCCP 
cited any statutory authority in a rulemaking document was a 2016 final 
rule revising sex-based nondiscrimination requirements relying on the 
Procurement Act. 81 FR 39108 (June 15, 2016).\33\ The Department's

[[Page 54456]]

2023 revisions to its religious discrimination standards likewise cited 
the Procurement Act as statutory authority. 88 FR 12842. Those 
citations, however, addressed only nondiscrimination requirements; they 
did not purport to authorize affirmative action obligations or OFCCP's 
system of administrative adjudication awarding monetary relief. The 
Department has never cited statutory authority when promulgating those 
regulations, which renders them especially vulnerable to legal 
challenge. See Council for Urological Interests v. Burwell, 790 F.3d 
212, 223 (D.C. Cir. 2015) (courts ``cannot consider [an] argument'' 
regarding an agency's authority that the agency never ``articulate[d] . 
. . during . . . rulemaking'').
---------------------------------------------------------------------------

    \31\ The 1982 Final Rule did not even identify the part of the 
E.O. that vests OFCCP or the Department with authority to seek back 
pay. The Order's ``penalty and sanctions'' section does not 
authorize the Department to seek back pay or monetary relief and 
instead merely authorizes the Department to recommend to DOJ or EEOC 
to bring civil cases in Federal court when it believes such relief 
is appropriate.
    \32\ NCLA suggested that 2002 marked the first time the Federal 
Government cited statutory authority in connection with regulations 
implementing E.O. 11246, pointing to E.O. 13279. That Executive 
Order, however, invoked the Procurement Act only to justify creating 
exemptions from E.O. 11246's requirements; it did not rely on the 
Act as authority to impose those requirements in the first instance.
    \33\ Two slightly earlier nondiscrimination regulations 
implemented Executive Orders that cited the Procurement Act. First, 
a 2014 final rule implemented E.O. 13672 by adding sexual 
orientation and gender identity as protected categories. That Order 
expressly invoked the Procurement Act. Implementation of Executive 
Order 13672 Prohibiting Discrimination Based on Sexual Orientation 
and Gender Identity by Contractors and Subcontractors, 79 FR 72985 
(Dec. 9, 2014). Second, a 2015 final rule implemented E.O. 13655, 
which amended E.O. 11236, which in turn relied on the Procurement 
Act to require non-retaliation against employees who discuss 
compensation. Government Contractors, Prohibitions Against Pay 
Secrecy Policies and Actions, 80 FR 54934 (Nov. 11, 2015).
---------------------------------------------------------------------------

    With this backdrop in mind, the Department turns to an analysis of 
its statutory authority for affirmative action, administrative 
adjudication, and nondiscrimination regulations implementing E.O. 
11246, beginning with the Procurement Act and then alternative sources 
of statutory authority suggested by commenters.
2. Statutory Authority Under the Procurement Act
    The Procurement Act authorizes the President to ``prescribe 
policies and directives that the President considers necessary to carry 
out'' the Procurement Act's purpose, which includes providing the 
Federal Government ``with an economical and efficient system for . . . 
[p]rocuring and supplying property and nonpersonal services, and 
performing related functions including contracting.'' 40 U.S.C. 101, 
121(a). Courts interpreting this provision have generally required a 
``sufficiently close nexus'' between the requirements imposed by an 
Executive Order and the Procurement Act's goals of economy and 
efficiency in Federal procurement.\34\
---------------------------------------------------------------------------

    \34\ Louisiana v. Biden, 55 F.4th 1017, 1026 (5th Cir. 2022) 
(quoting AFL-CIO v. Kahn, 618 F.2d 784 (1979)). The Sixth and Ninth 
Circuits recently interpreted the Procurement Act more narrowly, 
holding that the ``economical and efficient'' language in the Act's 
purpose clause at 40 U.S.C. 101 is not a basis for the President to 
exercise his authority under section 121(a). Commonwealth v. Biden, 
57 F.4th 545, 551-52 (6th Cir. 2023); Nebraska v. Su, 121 F.4th 1, 8 
(9th Cir. 2024).
---------------------------------------------------------------------------

    In Chrysler, the Supreme Court doubted that the Procurement Act 
authorizes all aspects of E.O. 11246. The Court observed that ``nowhere 
in the Act is there a specific reference to employment 
discrimination,'' and characterized lower court suggestions that the 
Procurement Act independently authorized the predecessors to E.O. 11246 
as ``dicta and made without any analysis.'' 441 U.S. at 304 n.34. The 
Court also noted a Third Circuit decision that concluded the 
Procurement Act's ``economical and efficient'' authority could support 
``at least some aspects'' of E.O. 11246 because ``it is in the interest 
of the United States in all procurement to see that its suppliers are 
not over the long run increasing its costs and delaying its programs by 
excluding from the labor pool available minority workmen.'' Id. 
(quoting Contractor Association, 442 F.2d at 170).
    More recently, the Supreme Court articulated the major questions 
doctrine, under which an agency must point to clear congressional 
authorization when asserting regulatory authority of vast economic or 
political significance.\35\ Under that doctrine, ``a vague statutory 
grant is not close to the sort of clear authorization required'' to 
sustain regulations with significant economic or political impact.\36\ 
Although these cases do not directly address OFCCP programs, multiple 
courts of appeals have applied this principle when analyzing the 
Procurement Act's ``economical and efficient'' provision, holding that 
it does not authorize the Federal government to impose vaccination 
mandates on Federal contractors.\37\
---------------------------------------------------------------------------

    \35\ Biden v. Nebraska, 600 U.S. 477, 504 (2023); West Virginia 
v. EPA, 597 U.S. 697, 732 (2022); NFIB v. DOL, 595 U.S. 109, 117 
(2022); Alabama Ass'n of Realtors v. HHS, 594 U.S. 758, 764 (2021).
    \36\ Id.
    \37\ See, e.g., Louisiana v. Biden, 55 F.4th at 1029; Kentucky 
v. Biden, 23 F.4th 585, 606 (6th Cir. 2022); Georgia v. President of 
the United States, 46 F.4th 1283, 1296 (11th Cir. 2022). The Ninth 
Circuit affirmed authority under the Procurement Act to impose a 
Federal contractor vaccine mandate, but that decision was vacated as 
moot, Mayes v. Biden, 67 F.4th 921 (9th Cir.), vacated as moot, 89 
F.4th 1186 (9th Cir. 2023), and criticized as unpersuasive by a 
subsequent Ninth Circuit panel, Nebraska v. Su, 121 F.4th 1, 8 (9th 
Cir. 2024).
---------------------------------------------------------------------------

    Several commenters argued that the major questions doctrine applies 
to OFCCP's regulations. The state attorneys general argued that 
``[r]egulating the hiring practices of approximately one-fifth the U.S. 
workforce to require employers to engage in discriminatory affirmative 
action no doubt implicates decisions of vast economic and political 
significance.'' (citing Louisiana, 55 F.4th at 1028). And EPPC claimed 
that ``the lucrative nature of federal contracts and this onerous 
enforcement regime is surely a matter of `vast economic and political 
significance' that requires `clear congressional authorization.' '' 
(quoting West Virginia v. EPA, 597 U.S. 697, 716, 723-32 passim 
(2022)).
a. Affirmative Action Regulations
    Part 60-2 applies to nonconstruction contractors and subcontractors 
with 50 or more employees and a Federal contract of at least $50,000. 
These regulations require contractors to analyze their workforce by 
race, ethnicity, and sex; compare workforce representation to labor-
market availability; and, where minorities or women are deemed 
``underutilized,'' establish placement goals at least equal to 
availability and take affirmative steps to meet those goals. Part 60-4 
applies to contractors and subcontractors performing Federal 
construction contracts or federally assisted construction contracts 
exceeding $10,000. Those regulations require contractors to use 
minority and female participation goals established by the Department 
and to take affirmative action to achieve those goals.
    In considering whether the Procurement Act authorizes Parts 60-2 
and 60-4, the Department finds that the E.O. 11246 affirmative action 
regulations likely trigger the major questions doctrine because they 
rest upon an assertion of regulatory authority of significant economic 
and political consequence. The Department estimates that approximately 
one-fifth of U.S. workers are employed by contractors subject to 
OFCCP's regulations, and courts have found regulatory regimes of 
comparable scope to be economically significant for purposes of the 
major questions doctrine. See Louisiana, 55 F.4th at 1028. This 
economic overbreadth arises in significant part because Parts 60-2 and 
60-4 apply not only to the employees who perform work on or in 
connection with Federal procurement contracts, but also to a 
contractor's entire workforce, including employees whose duties have no 
relationship to Federal procurement.\38\ The Procurement Act may 
authorize

[[Page 54457]]

contractual efficiency-enhancing provisions governing employees who 
work on or in connection with Federal contracts. But by extending 
regulatory requirements to portions of a contractor's workforce that 
have no connection with work performed under Federal procurement 
contracts, the regulations appear to sweep beyond the economy and 
efficiency of Federal procurement and may instead operate more like a 
form of economically significant employment regulation.
---------------------------------------------------------------------------

    \38\ Section 204 of E.O. 11246 allowed OFCCP to grant exemptions 
for facilities that are in all respects separate and distinct from 
the activities of the contractor related to the performance of the 
contract, provided the exemption would not interfere with or impede 
the effectuation of the purposes of the order. See 41 CFR 60-
1.5(b)(2). E.O. 11246's requirements covered all of a contractor's 
facilities, however, absent such a waiver.
---------------------------------------------------------------------------

    The Department also believes these affirmative action requirements 
to be politically significant within the meaning of the doctrine. 
Government-mandated classifications based on race and sex occupy a 
central place in contemporary public debate and have long been treated 
by courts as constitutionally sensitive. Although the constitutionality 
and consistency with Federal law of the E.O. 11246 affirmative action 
requirements are addressed elsewhere in this preamble, the Department 
concludes that the major questions doctrine independently requires 
clear congressional authorization for an agency to impose race- and 
sex-based employment mandates of this nature. By contrast, procurement 
contract conditions prohibiting discrimination and reinforcing 
compliance with existing Federal civil rights law do not represent the 
type of transformative assertion of regulatory authority that would 
implicate the major questions doctrine.
    That clear statement requirement is especially strong here because 
the regulations mandate race- and sex-conscious employment practices 
that are ``presumptively invalid'' under the Constitution, Vitolo, 999 
F.3d at 364, and that, on their face, could otherwise conflict with 
Title VII's general prohibition on race- and sex-based decision-making 
in employment. This is true even apart from the Department's 
independent conclusion that OFCCP's affirmative action regulations 
cannot survive strict scrutiny. Under the canon of constitutional 
avoidance, where a statute is susceptible to more than one plausible 
interpretation, the Department should adopt the interpretation that 
avoids serious constitutional questions. That canon therefore counsels 
against interpreting the Procurement Act to authorize regulations that 
trigger strict scrutiny in the first place by requiring race- and sex-
based classifications in employment.
    Similar concerns arise under Title VII. As explained above, 
compliance with OFCCP's affirmative action regulations encourage 
contractors to engage in race- and sex-conscious employment practices 
that would constitute direct evidence of unlawful discrimination under 
Title VII unless they fall within the narrow Weber-Johnson framework. 
See Frank, 347 F.3d at 137. Absent clear statutory authorization, the 
Department will not interpret the Procurement Act to empower it to 
promulgate regulations that induce conduct--e.g., trying to meet race- 
and sex-based employment goals by taking race or sex into account in 
employment decisions--that Title VII generally prohibits and that 
regulated parties must attempt to justify under a limited, judge-made 
exception.
    In sum, without clear congressional authorization, the Department 
will not infer an intent to delegate authority to impose race- and sex-
conscious employment mandates that raise serious constitutional 
concerns and that depart so sharply from the background principles of 
Federal civil rights law. The Procurement Act contains no such clear 
authorization for the broader affirmative-action framework implemented 
under E.O. 11246.
    These concerns are reinforced by the Department's regulatory 
history. While the Department has cited the Procurement Act as 
statutory authority for its nondiscrimination regulations, it has not 
previously identified the Procurement Act--nor any other statute--as 
providing clear authority to promulgate affirmative action regulations 
that encourage race- and sex-based employment considerations in 
employment. An effort to locate such authority now would require 
reading into a long-extant statute an unheralded power to regulate a 
substantial portion of the national workforce, a circumstance that 
courts have repeatedly viewed with skepticism. See Utility Air 
Regulatory Group v. EPA, 573 U.S. 302 (2014).
    The Department further finds application of the E.O. 11246 
affirmative action regulations to federally assisted construction 
projects exceeds the Procurement Act's authority for another reason. 
These projects are distinct from Federal procurement. Under the 
Procurement Act, the President's authority extends to prescribing 
policies and directives necessary to provide the Federal Government 
with an economical and efficient system for ``[p]rocuring and supplying 
property and nonpersonal services, and performing related functions.'' 
40 U.S.C. 101, 121(a). Federal financial assistance--where the 
Government provides grants or other assistance to third parties rather 
than procuring construction services for itself--does not constitute 
procurement of property or nonpersonal services and therefore falls 
outside the Procurement Act's core ``economical and efficient'' 
authority.
    This conclusion is reinforced by the 1976 amendments to the 
Procurement Act, which expressly prohibited sex discrimination in ``a 
program or activity carried on or receiving federal assistance under 
this subtitle[.]'' 40 U.S.C. 122(a). Congress's decision to legislate 
separately with respect to sex discrimination in federally assisted 
programs confirms that Federal assistance is distinct from procurement 
and that conditions imposed on recipients of such assistance require 
separate and explicit statutory authorization, rather than reliance on 
the Procurement Act's general procurement-based ``economical and 
efficient'' authority.
    The Department recognizes that Contractors Association upheld the 
Philadelphia Plan's racial employment goals by invoking the President's 
``general authority'' to ``analogiz[e] federally assisted construction 
to direct federal procurement.'' 442 U.S at 171. The court further 
reasoned that, because no Act of Congress forbade the challenged race-
based employment goals, they fell within the ``implied authority of the 
President and his designees.'' Id. But that reasoning cannot be readily 
reconciled with the Supreme Court's subsequent emphasis on the need for 
affirmative congressional delegation, specifically in the context of 
OFCCP regulations. Chrysler, 441 U.S. at 304. The pertinent inquiry is 
not whether Congress failed to forbid the agency's action, but whether 
Congress authorized it. Id. In any event, Contractors Association also 
upheld the Philadelphia Plan because it was designed to remedy 
``obvious underrepresentation [that] was due to the exclusionary 
practices of the unions'' in specific trades. Id. at 171. By contrast, 
OFCCP's current affirmative action requirements in connection with 
federally assisted projects are not remedial.
    Accordingly, the Department concludes that the Procurement Act does 
not provide congressional authorization necessary to support OFCCP's 
race- and sex-conscious affirmative action regulations related to E.O. 
11246. As explained below, the concerns identified here arising from 
race- and sex-based affirmative action obligations do not undermine the 
authority under the Procurement Act to condition contracts on 
nondiscrimination requirements that are consistent with Federal civil 
rights law.

[[Page 54458]]

b. Administrative Enforcement Regulations
    The regulations at 41 CFR 60-1.26 authorize OFCCP to enforce its 
affirmative action and nondiscrimination requirements related to E.O. 
11246 through administrative proceedings in which the agency may seek 
monetary relief, including back pay. Those proceedings operate with the 
force of law and are reviewed by Federal courts under a deferential 
standard. The regulations' creation of a quasi-judicial enforcement 
mechanism within the Executive Branch required a clear grant of 
authority from Congress.\39\ The regulations did not have one. As the 
NCLA commented, the absence of any clear statutory framework for 
enforcement of E.O. 11246 ``stands in stark contrast to other 
enforcement and adjudication regimes that protect employees and were 
specifically authorized by Congress.'' NCLA highlighted two statutory 
regimes enforced by OFCCP in which Congress expressly authorized the 
Department to conduct administrative enforcement of affirmative action 
or nondiscrimination requirements through clear, defined statutory 
limits. VEVRAA authorized the Department to receive and investigate 
complaints from qualified veterans alleging noncompliance by 
contractors and to take appropriate enforcement action consistent with 
the terms of the contract and applicable law. 38 U.S.C. 4212(a). 
Similarly, under Section 503, Congress required certain Federal 
contracts to include affirmative action provisions for individuals with 
disabilities and expressly authorized the Department to receive and 
investigate complaints and to take appropriate enforcement action. 29 
U.S.C. 793(b). By comparison, the Procurement Act contains no language 
authorizing the Department to receive and investigate complaints of 
employment discrimination and to take appropriate enforcement 
actions.\40\ That silence is significant in light of Congress's ability 
to legislate administrative enforcement mechanisms within the 
Procurement Act when it chooses to do so. Congress amended the 
Procurement Act in 1976 to prohibit sex discrimination in programs 
receiving Federal assistance, and Congress expressly authorized 
administrative enforcement through ``agency provisions and rules 
similar to'' those already established under Title VI. See Sec. 8, 
Public Law 94-519, 90 Stat. 2456 (1976) (now codified at 40 U.S.C. 
122). Title VI, in turn, requires the agency awarding Federal 
assistance to follow detailed procedural safeguards in enforcement 
proceedings--for example, pursuing conciliation before punishment, 
limiting relief to the specific program or activity in which the 
violation occurred, and restrictions on monetary relief--that are 
missing from Part 60-1.26.
---------------------------------------------------------------------------

    \39\ See, e.g., Commodity Futures Trading Comm'n v. Schor, 478 
U.S. 833, 851-57 (1986).
    \40\ This conclusion concerns the Department's regulatory 
enforcement framework under E.O. 11246, including the use of 
administrative adjudication and the pursuit of monetary remedies 
through agency proceedings. It does not address the ordinary 
contract administration authorities of procuring agencies to monitor 
compliance with contract terms, including the authority to require 
contractors to furnish information relevant to compliance, to 
evaluate contractor responsibility, to pursue appropriate corrective 
action, or to enforce contractual requirements through traditional 
procurement remedies such as termination, suspension, or debarment.
---------------------------------------------------------------------------

    Title VII's comprehensive and carefully calibrated framework for 
enforcing employment discrimination claims reinforces the Department's 
belief that it lacks authority to adjudicate employment 
nondiscrimination claims under E.O. 11246. See 42 U.S.C. 2000e-4 
through 2000e-6. Early proposed versions of Title VII proposed 
empowering the Department of Labor with authority to investigate 
discrimination claims and prosecute complaints before an administrative 
Equal Employment Opportunity Board, which would adjudicate claims and 
``issue broad remedial orders to remedy violations,'' subject to 
judicial review of the final administrative decision. EEOC, Legislative 
History of Titles VII and XI of the Civil Rights Act of 1964, at 3070-
71 (H.R. Rep. No. 88-914, at 14, 711(b) (1963)). Congress rejected that 
approach, opting instead to create EEOC and vest it with enforcement 
authority. The EEOC may investigate discrimination claims, issue 
subpoenas, and attempt informal resolution that can result in binding 
conciliation agreements enforceable in court, but it has no authority 
to conduct in-house adjudications or issue binding remedial orders for 
private employers. See Sec. 705-713, Public Law 88-352, 78 Stat. 241 
(codified as amended at 42 U.S.C. 2000e-5). Where enforcement is 
pursued against private employers, the EEOC must bring suit in Federal 
court.
    That statutory structure reflects deliberate legislative judgments 
concerning forum, process, and explicit authorization of relief for 
employment discrimination. It would therefore be inappropriate to 
presume that Congress implicitly authorized the Department to operate a 
parallel administrative enforcement system--empowered to adjudicate 
employment discrimination claims and award monetary relief against 
private sector employers--through the Procurement Act's general 
provisions, particularly where Congress affirmatively rejected that 
very model when enacting Title VII.\41\
---------------------------------------------------------------------------

    \41\ An early draft of Title VII also considered ratifying E.O. 
11246's predecessors by authorizing ``[t]he President . . . to take 
such action as may be appropriate to prevent . . . an unlawful 
employment practice [such as a Title VII violation] by a person in 
connection with the performance of a contract with . . . the United 
States.'' EEOC, Legislative History of Titles VII and XI of the 
Civil Rights Act of 1964, at 2014 (H.R. Rep. No. 88-914, at 14, Sec. 
711(b) (1963)). This approach was not taken in part because 
Opponents explained it ``strengthened and broadened the enforcement 
provisions [of Title VII] by giving the President blanket and 
unlimited authority (sec. 711(b))'' regarding government 
contractors. Id. at 2087 (H.R. Rep. No. 88-914, at 87).
---------------------------------------------------------------------------

    The Department concludes that the Procurement Act does not 
authorize OFCCP to bring E.O. 11246-related administrative enforcement 
actions against contractors to compensate alleged victims of employment 
discrimination.
    The Department also received comments regarding its proposal to 
relocate the administrative enforcement proceeding procedures from the 
revoked E.O. 11246 regulations directly into the VEVRAA and Section 503 
implementing regulations. Some commenters expressed their support for 
this proposal, asserting that the relocation is reasonable in light of 
the E.O. 11246 rescission. Other commenters recommended that the 
Department modify the administrative enforcement proceeding procedures 
because of recent case law in this area.\42\ Relying on recent case 
law, these other commenters asserted that OFCCP's practice of 
adjudicating investigations through proceedings before Administrative 
Law

[[Page 54459]]

Judges may not survive constitutional scrutiny.
---------------------------------------------------------------------------

    \42\ See e.g,. SEC v. Jarkesy, 603 U.S. 109 (2024) (finding that 
the Seventh Amendment entitles a defendant to a jury trial when the 
SEC seeks civil penalties against him for securities fraud, as the 
SEC's antifraud provisions replicate common law fraud and it is well 
established that common law claims must be heard by a jury); ABM 
Industry Groups, LLC vs. U.S. Department of Labor, et al, 756 
F.Supp.3d 468 (S.D. Tex 2024) (holding that under Jarkesy, Plaintiff 
is likely to succeed on the merits of its claim that the assigned 
DOL ALJ is unconstitutionally protected by two layers of good-cause 
removal restrictions); Sun Valley Orchards, LLC v. U.S. Department 
of Labor, 148 F.4th 121 (3d Cir. 2025), cert. granted, 2026 WL 
1127242 (Apr. 27, 2026) (finding that as DOL sought common law 
remedies, including civil penalties and back wages, Sun Valley was 
entitled to have its case decided by an Article III court); Space 
Exploration Techs. Corp. v. NLRB, 2025 U.S. App. LEXIS 21226 (5th 
Cir. Aug. 19, 2025) (discussing the constitutionality of the ALJ's 
multi-layered removal provisions, specifically, that ALJ's may be 
removed only ``for good cause established and determined by the 
Merit Systems Protection Board on the record after opportunity for 
hearing before the Board.'' The Court found that ALJs are inferior 
officers insulated by two layers of for-cause removal protection--an 
arrangement the Supreme Court and the Fifth Circuit have both held 
unconstitutional.).
---------------------------------------------------------------------------

    The Department concludes that it is not necessary to address the 
constitutional question raised by these comments because E.O. 11246 has 
been revoked and, in any event, OFCCP's administrative enforcement of 
E.O. 11246 is not statutorily authorized. Moving regulations concerning 
procedural provisions will provide clarity about the administrative 
enforcement procedures applicable to VEVRAA and Section 503. The 
Department acknowledges that the case law in this area is evolving. To 
the extent that the Department determines that it may need to update 
these procedures in light of changing case law, such changes may be 
pursued in a separate rulemaking.
c. Nondiscrimination Regulations
    The Department next considers regulations at Part 60-1 containing 
nondiscrimination requirements relating to race, ethnicity, national 
origin, sex, religion, sexual orientation, and gender identity. As 
explained above, the Department concludes that the Procurement Act's 
``economical and efficient'' authority is limited to Federal 
procurement and does not extend to Federal financial assistance. That 
authority therefore does not delegate power to impose general 
nondiscrimination requirements on recipients or subrecipients of 
Federal assistance, nor does it authorize the Department to seek 
monetary relief through administrative enforcement mechanisms.
    That said, the Procurement Act nonetheless authorizes the President 
to impose requirements through contract clauses designed to promote 
economy and efficiency in procurement. To keep such authority within 
the government's procurement powers, nondiscrimination requirements 
should be enforced through procurement-based remedies, such as 
cancellation or debarment, as opposed to back-pay or other monetary 
relief for nonparties to the procurement contract at issue. As noted 
above, the nondiscrimination requirements imposed under E.O. 11246 were 
not limited to conduct occurring in connection with the performance of 
work under a procurement contract but instead applied across a 
contractor's entire workforce, including employees whose duties bore no 
relationship to Federal procurement. This lack of a limiting 
procurement nexus contributed to the significant economic and political 
scope of the regulatory scheme. By contrast, limiting procurement-based 
nondiscrimination requirements to conduct occurring in connection with 
the performance of Federal contract work better ensures the requisite 
nexus to the government's interest in economy and efficiency in 
procurement. Such a limitation confines the requirements to the context 
in which the government acts as a market participant and helps avoid 
the type of broad assertion of regulatory authority over a contractor's 
general employment practices that could raise concerns under the major 
questions doctrine.
    Properly limited, procurement-based nondiscrimination conditions 
applicable solely to work performed in connection with Federal 
contracts fall within the President's authority under the Procurement 
Act to promote an economical and efficient system of Federal 
procurement. The Federal Government has a legitimate interest in 
contracting with firms that do not exclude qualified workers on grounds 
unrelated to merit and that therefore draw from the full available 
labor force, reducing inefficiencies associated with unjustified 
exclusionary practices. See Contractor Association, 442 F.2d at 170. 
Conditioning Federal contracts on compliance with existing Federal 
civil rights law prohibiting discrimination reflects a conventional 
exercise of the government's discretion to determine the terms on which 
it will enter into contracts and to decline to contract with entities 
that violate applicable law. For instance, E.O. 14173 forbids 
contractors from violating Federal anti-discrimination laws, 90 FR 
8634, and E.O. 14398 further prohibits contractors from racial 
discrimination in connection with work performed on contracts, 91 FR 
16147. Unlike the E.O. 11246 affirmative action regulations being 
rescinded, these requirements are fully consistent with Federal civil 
rights laws. They forbid rather than encourage race-conscious decision-
making. They do not create administrative adjudication schemes to award 
monetary relief. Executive Order 14398 is specifically limited to work 
performed in connection with procurement contracts. While E.O. 14173 
may apply beyond a contractor's workforce that performs procurement 
functions, it merely requires contractors to follow Federal 
antidiscrimination laws. It is neither ``transformative'' nor 
``unheralded'' for the Federal government to stop doing business with 
companies that violate Federal laws. Rather, such a sensible 
contracting practice bears a ``close nexus'' to the economy and 
efficiency of procurement and does not claim regulatory authority of 
vast economic or political significance.
    By contrast, imposing nondiscrimination requirements under the 
Procurement Act that create substantive employment obligations beyond 
existing Federal civil rights law or that establish parallel regulatory 
enforcement regimes could raise serious legal concerns. The Procurement 
Act's ``economical and efficient'' authority does not supply sufficient 
authorization for transformative procurement conditions, such as a 
vaccine mandate applicable to contractors' employees. See Louisiana v. 
Biden, 55 F.4th 1017, 1026 (5th Cir. 2022). The creation or 
modification of employment nondiscrimination standards is itself a 
matter of substantial economic and political significance. Congress has 
addressed those questions through comprehensive civil rights statutes 
specifying the scope of prohibited conduct, enforcement mechanisms, and 
available remedies. The Department would expect Congress to speak 
clearly if it intended to authorize additional employment 
nondiscrimination standards, exceptions from existing law, or parallel 
regulatory regimes applicable to contractors. The Procurement Act 
contains no such authorization. Rather, its authority should be 
interpreted to authorize compliance with nondiscrimination standards 
that promote ``economical and efficient'' merit-based decision-making, 
and to enforce those standards with procurement-based remedies such as 
cancellation of contracts. Procurement-based nondiscrimination 
conditions may include reporting mechanisms necessary to allow agencies 
to assess contractor compliance with contractual nondiscrimination 
obligations, such as certification requirements, reporting obligations, 
and information-sharing provisions tied to contract performance.
    An example of an E.O. 11246 nondiscrimination obligation not found 
in Federal discrimination law is the compensation-discussion anti-
retaliation provisions promulgated pursuant to E.O. 13665's amendments 
to section 202 of E.O. 11246. See 80 FR 54934 (Sept. 11, 2015); 41 CFR 
60-1.4(a)(3), (b)(3). Those regulations prohibit contractors from 
retaliating against employees who inquire about, discuss, or disclose 
compensation information. They impose legally binding employment 
obligations that extend beyond merely requiring compliance with 
existing civil rights statutes. They apply to employees whose work has 
no connection with Federal procurement and are enforceable through 
monetary awards. In promulgating those regulations, the

[[Page 54460]]

Department said that economy and efficiency in Federal procurement 
requires contractors to compensate employees based on merit and that 
eliminating barriers created by pay secrecy helps ensure that 
contractors compensate employees based on merit. The Department also 
asserted that allowing employees of contractors to discuss their pay 
minimizes risks of enforcement actions that could result from pay 
secrecy policies. 80 FR 54934, 54937 (Sept. 11, 2015).
    Upon reconsideration, the Department concludes that this 
speculative rationale does not satisfy the Procurement Act's 
requirement of a ``close nexus'' between procurement conditions and the 
government's interest in economy and efficiency. AFL-CIO v. Kahn, 618 
F.2d 784, 793 (D.C. 1979). In Kahn, the en banc D.C. Circuit upheld an 
executive order limiting contractors' ability to raise wages and prices 
because the measure bore a direct and immediate relationship to 
contract pricing and likely savings to the Government. Id. at 793. The 
court cautioned, however, that the Procurement Act does not ``write a 
blank check for the President to fill in at his will.'' Id. The wage 
controls in Kahn had a close nexus to contracting efficiency: limits on 
wage growth directly enabled contractors to pass labor cost savings to 
the contractors. By contrast, the regulations promulgated pursuant to 
E.O. 13665's amendments to section 202 of E.O. 11246 rest on far more 
attenuated reasoning: that restrictions on compensation discussions may 
impede detection of discrimination; that undiscovered discrimination 
may persist; that such persistence may increase the risk of enforcement 
actions or labor disputes; and that those downstream effects may 
disrupt Federal procurement. The Department believes that this 
speculative chain is insufficient to establish the requisite close 
nexus to procurement economy and efficiency. See Chrysler, 441 U.S. at 
304 (``But in order for such regulations to have the `force and effect 
of law,' it is necessary to establish a nexus between the regulations 
and some delegation of the requisite legislative authority by 
Congress.''). Accepting such logic would effectively convert the 
Procurement Act's limited procurement authority into a general license 
to regulate workplace practices whenever an indirect economic benefit 
is asserted, a position courts have rejected. See Nebraska v. Su., 121 
F.4th 1, 10 (9th Cir. 2024); Louisiana v. Biden, 55 F.4th at 1031-1032.
    Some commenters noted that the National Labor Relations Act (NLRA) 
protects certain workers from retaliation for engaging in ``concerted 
activity,'' including wage discussions, and argued that those 
protections do not extend to all categories of workers, such as 
agricultural workers and supervisors. These commenters urged the 
Department to extend such protection to all contractor workers. But the 
NLRA's coverage is a reflection of Congress's deliberate policy 
judgment. If Congress determines that the scope of anti-retaliation 
protections should be expanded, then it may do so through legislation.
    The Department declines to rely on attenuated procurement-
efficiency reasoning to expand such protections beyond the boundaries 
Congress established. Even where a procurement-based nondiscrimination 
condition would not independently trigger the major questions doctrine, 
the Procurement Act requires that such a condition be justified by a 
sufficient nexus to procurement economy and efficiency. Any additional 
nondiscrimination requirement must produce benefits to procurement 
efficiency that are not outweighed by compliance costs that are passed 
on to the government. Absent a demonstrated, cost-justified connection 
to procurement economy and efficiency, novel nondiscrimination 
requirements may exceed the Procurement Act's authorization.
    Accordingly, the Department concludes that while the Procurement 
Act would support procurement-based nondiscrimination conditions that 
operate as contractual assurances of compliance with existing Federal 
employment discrimination law and that are enforceable only through 
traditional contract remedies, the Procurement Act does not provide 
authority under E.O. 11246 to impose nondiscrimination requirements on 
recipients of Federal financial assistance, to establish new or 
expanded nondiscrimination standards, or to authorize administrative 
adjudication or monetary relief outside traditional procurement 
remedies, such as contract cancellation or debarment. At the same time, 
the Department recognizes that the Procurement Act supports 
nondiscrimination requirements applicable to contractors, provided such 
requirements are enforced through contract remedies, consistent with 
existing Federal civil rights law, and have a close nexus to the 
economy and efficiency of Federal procurement. Thus, nothing in this 
rule limits or questions the President's authority under the 
Procurement Act to impose nondiscrimination requirements on Federal 
contractors through contract terms designed to promote economy and 
efficiency in procurement. To the contrary, properly tailored 
procurement conditions prohibiting discrimination in a manner 
consistent with existing Federal civil rights laws fall squarely within 
the traditional scope of that authority.
    Finally, the Procurement Act delegates this power to the President, 
not the Department. See 40 U.S.C. 121(a). In E.O. 14173, the President 
rescinded his sub-delegation to the Department. 90 FR 8634. Executive 
Order 14398 authorizes other agencies, rather than the Department, to 
enforce the contract clause prohibiting race-based discrimination. 91 
FR 16148. The Department thus lacks authority to enforce these 
nondiscrimination requirements across any other Federal agency.
3. Alternative Sources of Statutory Authority
    Several commenters advanced alternative arguments in support of the 
regulations' legality. The Department has carefully considered these 
arguments and for the reasons explained below is unpersuaded.
a. Longevity of the Regulations
    Nearly all comments opposing the rescission stressed the sixty-year 
duration of the regulatory regime under E.O. 11246, implying or 
explicitly arguing that the duration of the regulations supports their 
statutory authorization. The Department disagrees.
    Because legislative power is vested in Congress, exercise of quasi-
legislative authority by executive agencies must be rooted in an 
affirmative delegation of authority from Congress and remain subject to 
the limits Congress imposes. Chrysler, 441 U.S. at 302. An agency 
cannot acquire regulatory authority through historical practice, 
acquiescence, or inertia. See United States v. Morton Salt, 338 U.S. 
632, 647 (1950). Where Congress has not authorized an agency to impose 
legally binding obligations, the mere longevity of a regulation does 
not cure the absence of statutory authority. As the en banc Fifth 
Circuit explained when holding that an agency lacked statutory 
authority to approve race- and sex-conscious hiring requirements for 
corporate boards: ``The Executive cannot acquire authority forbidden by 
law through a process akin to adverse possession.'' Alliance for Fair 
Board Recruitment v. SEC, 125 F.4th 159, 184 (2024) (internal quotation 
marks and alterations omitted) (quoting Biden v.

[[Page 54461]]

Texas, 597 U.S. 785, 830 (2022) (Alito, J., dissenting)).
b. Titles VI and VII of the 1964 Civil Rights Act
    Some commenters contended that generally applicable equal 
employment opportunity statutes--particularly Titles VI and VII of the 
Civil Rights Act of 1964--authorize or require compliance with the E.O. 
11246 regulatory framework. For example, the AFL-CIO asserted that 
``EEO laws, which were passed by Congress, require compliance'' with 
the regulations. However, neither Title VI nor Title VII ``contain[ ] 
any express delegation of substantive lawmaking authority to the 
President [or the Department].'' Liberty Mut. Ins. Co. v. Friedman, 639 
F.2d 164, 172 (1981). As the Supreme Court explained, the relevant 
inquiry has ``usually been put in terms of whether E.O. 11246 is 
consistent with these titles,'' not whether they authorize the Order or 
its implementing regulations. Chrysler, 441 U.S. at 305 n.35.
    As explained above, the Department's regulations requiring 
affirmative action are inconsistent with Titles VI and VII. Under 
existing precedent, which may no longer be viable in light of SFFA, 
Callais, and other recent Supreme Court decisions, race- or sex-based 
affirmative action is permissible only where it is remedial of 
identified past discrimination and appropriately tailored to that 
objective. As explained earlier in Section III.B.3.a, OFCCP's E.O. 
11246 affirmative action regulations do not meet those requirements. 
Among other issues, the regulations do not require any finding or 
evidence of prior unlawful discrimination by the regulated contractor 
and instead mandate race- and sex-based employment measures on a non-
remedial basis. Titles VI and VII therefore do not authorize such 
requirements.
    Titles VI and VII likewise do not authorize OFCCP's 
nondiscrimination enforcement regime. Congress assigned enforcement 
authority under Title VI to the DOJ and to agencies administering 
Federal financial assistance, subject to specific procedural and 
remedial limits. Congress assigned private-sector enforcement authority 
under Title VII to the EEOC, which lacks authority to adjudicate claims 
or award monetary relief in administrative proceedings and must pursue 
enforcement through Federal court. Neither statute assigns any 
enforcement or adjudicatory role to the Department of Labor with 
respect to private-sector employment discrimination.
c. Ratification Under the Equal Employment Act of 1972
    NNU argued that Congress ratified the E.O. 11246 affirmative action 
regulations through enactment of the Equal Employment Opportunity Act 
of 1972, pointing to 42 U.S.C. 2000e-17. As an initial matter, 
Congress's rejection of proposed provisions in the 1972 Act, which 
would have curtailed affirmative action efforts under E.O. 11246, does 
not constitute ratification. Friedman, 639 F.2d at 172. Legislative 
inaction or the failure to enact limiting amendments does not amount to 
affirmative approval of prior executive or agency action.
    To effect ratification of prior agency action, Congress must 
recognize that the action was unauthorized when taken and must 
expressly ratify it in clear and unequivocal statutory language. EEOC 
v. CBS, Inc., 743 F.2d 969, 974 (2d Cir. 1984). Legislative 
acquiescence, awareness, or accommodation is insufficient. Even 
statutory provisions that explicitly acknowledge existing agency 
practices do not ratify the agency's underlying claim of authority 
unless they ``expressly approved the agency's interpretation.'' Tiger 
Lily, LLC v. HUD, 992 F.3d 518, 524 (6th Cir. 2021) (holding that 
congressional recognition and temporary extension of an eviction 
moratorium did not ratify the agency's unlawful imposition of the 
mandate); accord Alabama Ass'n of Realtors v. HHS, 539 F. Supp. 3d 29, 
42 (D.D.C. 2021), aff'd, 594 U.S. 758 (``To [ratify], however, Congress 
must make its intention explicit.'').
    Section 2000e-17, relied on by NNU, limits the circumstances under 
which a Federal agency may deny, withhold, terminate, or suspend a 
government contract where an employer has an affirmative action plan 
previously accepted by the Government, unless the employer is afforded 
a full administrative hearing. The provision is procedural and 
constraining in nature. It does not acknowledge that the E.O. 11246 
regulations were unauthorized when adopted, nor does it confer 
authority to impose affirmative action or nondiscrimination 
requirements.
    If anything, Section 2000e-17 restricts agencies' use of 
procurement sanctions to enforce equal opportunity law. While the 
provision reflects congressional awareness that some contractors 
maintained AAPs under executive orders, it nowhere authorizes the 
Department or any other agency to require AAPs, much less race- or sex-
based employment goals. Nor does it authorize any agency to seek 
monetary relief in administrative proceedings.
    Accordingly, neither Section 2000e-17 nor any other provision of 
the Equal Employment Opportunity Act of 1972 provides statutory 
authorization for the E.O. 11246 affirmative action, nondiscrimination, 
or administrative adjudication regulations.
    Finally, even if Congress had purported to ratify non-remedial 
race- or sex-based affirmative action requirements of the type imposed 
by OFCCP's regulations, such ratification would not bind the 
Department, compelling it to retain regulations that raise serious 
constitutional concerns. After Congress has expressed approval of 
regulations, an agency ``may well reach a different judgment given 
changed circumstances.'' Motor Vehicle Mfrs. Ass'n, Inc. v. State Farm 
Mut. Auto. Ins. Co., 463 U.S. 29, 45 (1983). That is particularly the 
case with regulations at odds with recent constitutional jurisprudence. 
Because the regulations mandate race- and sex-based action without the 
findings and tailoring required under equal-protection principles, they 
would exceed the scope of constitutionally permissible affirmative 
action. Congress cannot ratify regulations that the Constitution itself 
forbids.
    For these reasons, the Department concludes that none of the 
alternative sources of statutory authority identified by commenters 
authorizes the regulatory framework implementing E.O. 11246. The 
Procurement Act's goal of ensuring an ``economical and efficient'' 
system of Federal procurement does not authorize E.O. 11246 regulations 
requiring affirmative action or empowering OFCCP to seek monetary 
relief through administrative proceedings. The Department agrees with 
the state attorneys general and other commenters that those portions of 
the regulatory framework lack statutory authorization and would 
therefore require rescission even if E.O. 11246 had not been revoked. 
At the same time, the Department recognizes that the Procurement Act 
may support certain nondiscrimination requirements applicable to 
contractors, to the extent such requirements are enforced through 
contract remedies, consistent with existing Federal civil rights law, 
and have a close nexus to the economy and efficiency of Federal 
procurement.

D. Effects of Rescission

    Some commenters supported the rescission of the E.O. 11246 
regulations on the grounds that rescission would yield favorable 
economic effects, including reduced compliance costs and regulatory 
burdens. Other commenters who opposed rescission contended that

[[Page 54462]]

the regulations generated cost savings or produced broader social 
benefits. The Department notes, however, that it need not justify 
rescission by weighing the practical or policy effects of eliminating 
the regulations implementing E.O. 11246. The Department is rescinding 
these regulations because they can no longer be lawfully maintained 
following the revocation of E.O. 11246. Moreover, that substantial 
portions of the regulatory framework are unconstitutional, inconsistent 
with Federal civil rights statutes, and unsupported by any clear grant 
of statutory authority provides additional grounds, which on their own 
support rescission.
    An agency must consider and respond to significant comments that it 
receives during the comment period. Perez v. Mortgage Bankers Ass'n, 
575 U.S. 92, 96 (2015). ``Significant comments are those `which, if 
true, raise points relevant to the agency's decision and which, if 
adopted, would require a change in an agency's proposed rule.' '' City 
of Portland, Oregon v. EPA, 507 F.3d 706, 715 (D.C. Cir. 2007) (quoting 
Home Box Office, Inc. v. FCC, 567 F.2d 9, 35 n.58 (D.C. Cir. 1977)). 
Comments on any other aspect of the merits of the regulations cannot 
require a change in the result ordained by E.O. 14173's revocation of 
E.O. 11246. Though not significant, comments related to the benefits 
and the alleged effects of rescinding the regulations will be discussed 
below.
    Although not determinative of the result, the Department 
nonetheless concludes that rescission is ultimately beneficial. As 
explained below, rescinding these regulations reduces regulatory 
burdens and compliance costs for contractors, with resulting savings 
passed on to contracting Federal agencies and, ultimately, to consumers 
and taxpayers. Rescission also eliminates regulatory mandates that 
required or encouraged race- and sex-based decision-making, promoted 
racialized frameworks that divided Americans along immutable 
characteristics, and conflicted with the Nation's commitment to equal 
treatment under the law. Moreover, the Department finds that the 
regulations at issue produced no discernible benefits that could 
justify their continuation and, at best, duplicated existing statutory 
protections under Federal civil rights law and agency procurement 
policies. At worst, they impose costly, divisive, and unnecessary 
requirements that undermine meritocracy and drive social division.
1. Social and Institutional Effects
    In evaluating the effects of rescinding the regulations 
implementing E.O. 11246, the Department begins by considering social 
and institutional consequences of government-mandated consideration of 
race and sex in employment decision-making and processes.
    Beyond being at odds with the Constitution's equal protection 
principles, the Department is concerned that government policies that 
classify individuals by race foster resentment, erodes trust, and 
weakens shared civic identity that underpins a pluralistic society. Cf. 
Hirabayashi v. United States, 320 U.S. 81, 100 (1943) (``Distinctions 
between citizens solely because of their ancestry are by their very 
nature odious to a free people whose institutions are founded upon the 
doctrine of equality.''). The state attorneys general commented that 
the regulations' affirmative action requirements pit races against each 
other, instill in the benefited races feelings of inferiority or 
entitlement, and normalize the notion that race is a proper 
consideration. The notion that race is a proper consideration can 
become self-reinforcing. The Department concludes that affirmative 
action requirements imposed through the E.O. 11246 regulations 
contributed to these corrosive effects by institutionalizing race- and 
sex-based classifications in employment decisions across a substantial 
segment of the American workforce. Such governmental requirements pit 
groups against one another, intensifying racial tension,\43\ and they 
reorient workplace decision-making away from individual merit and 
toward group-based expectations. Rather than reducing racial 
consciousness, the E.O. 11246 affirmative action regulations heighten 
it by signaling that race is a relevant and appropriate factor in 
evaluating workers.
---------------------------------------------------------------------------

    \43\ As with college admissions, employment opportunities ``are 
zero-sum. A benefit provided to some applicants but not to others 
necessarily advantages the former group at the expense of the 
latter.'' SFFA, 600 U.S. at 218-19.
---------------------------------------------------------------------------

    These problems are amplified by the arbitrary nature of racial and 
ethnic categories. See, e.g., SFFA, 600 U.S. at 216-17 (noting that 
racial categories such as `` `Hispanic,' are arbitrary or 
undefined.''). In SFFA, when the Supreme Court asked, ``how are 
applicants from Middle Eastern countries classified,'' counsel for the 
University of North Carolina replied that he did not know. Id. The 
Department would have likewise struggled to provide a well-founded 
answer to the same question, as individuals of Middle Eastern and North 
African ancestry were not included in OFCCP's regulatory definition of 
``minorities.'' \44\ See 41 CFR 60-4.3.
---------------------------------------------------------------------------

    \44\ The categories available to contractors were set to change 
within the next few years. On March 29, 2024, OMB published 
Revisions to OMB's Statistical Policy Directive No. 15: Standards 
for Maintaining, Collecting, and Presenting Federal Data on Race and 
Ethnicity, 89 FR 22182. SPD 15 was revised to, among other things, 
add Middle Eastern or North African (MENA) as a minimum reporting 
category, separate and distinct from the White category. OMB defined 
MENA as ``Individuals with origins in any of the original peoples of 
the Middle East or North Africa, including, for example, Lebanese, 
Iranian, Egyptian, Syrian, Iraqi, and Israeli.'' 89 FR 22191. OMB 
has set timelines by which federal agencies' information collections 
that collect race and ethnicity data must be made consistent with 
the updated standards. Thus, if OFCCP continued to have authority to 
enforce as to race and ethnicity, it would have incorporated the 
MENA category into its data collection requirements.
---------------------------------------------------------------------------

    The Department is also mindful of the stigma associated with race- 
and sex-based employment decisions. Employment systems that rely on 
numerical goals or benchmarks tied to race or sex may undermine 
confidence in merit-based outcomes and cast doubt on the achievements 
of women and minority workers by creating uncertainty as to whether 
their selections reflect job qualifications or race- and sex-based 
employment goals. Such goals ``stamp minorities with a badge of 
inferiority.'' Adarand Constructors, 515 U.S. at 241 (Thomas, J., 
concurring). Independent Women agreed that ``the credibility of the 
very individuals those policies aim to support is put in question. 
Indeed, Americans are less likely to take women and minorities 
seriously when they believe those individuals were hired to fulfill a 
quota rather than because of their qualification or abilities.''
    Taken together, the Department believes these considerations 
reinforce the Department's conclusion that rescinding the regulations 
implementing E.O. 11246 promotes equal treatment under law and advances 
social cohesion by rejecting race- and sex-based decision-making in 
employment. Moving away from government-imposed racial classifications 
and toward neutral, merit-based standards supports workplace fairness 
and reduces division and conflict. The proposed rescission therefore 
represents an overdue course correction toward individual dignity and 
equality under the law.
2. Efficiency of Government Contracting
    In the NPRM, the Department noted that rescinding the regulations 
will improve the efficiency of the Federal

[[Page 54463]]

contracting process and decrease employer burden, as contractors will 
no longer be required to undertake the E.O. 11246 requirements. Some 
commenters disagreed with this position and asserted that the E.O. 
11246 regulations facilitated the adoption of workplace practices that 
help contractors recruit and retain talent, boost their profitability, 
and reduce their risk, thereby resulting in efficient and effective 
performance of government contracts.
    The Department disagrees with these comments. Rather than promoting 
efficient and effective performance of government contracts, the 
requirements imposed significant and unnecessary burdens on 
contractors. For example, the AAP requirements set forth at 41 CFR 60-
2.10 alone required contractors to create an organizational profile, 
conduct a job group analysis, and conduct an availability analysis, 
among other requirements, on an annual basis. Further, resolving cases 
under E.O. 11246's framework often resulted in prolonged disputes about 
the legal sufficiency of the agency's findings and proposed remedies. 
With these disputes, an E.O. 11246 discrimination case would take, on 
average, over three years to resolve. Many contractors would also hire 
legal representatives, consultants, and statistical experts to help 
resolve these matters, which resulted in greater expenditure of time 
and money. Even a technical violation allegation--such as a 
contractor's alleged noncompliance with an affirmative action 
provision--would average over 14 months to resolve. Based on the cost-
benefit analysis in Section IV(B) below, the elimination of these 
requirements will result in quantified annual savings and benefits of 
approximately $996.37 million per year.
    Many commenters agreed that these burdens were significant and 
unnecessary. Commenters representing contractors, including Associated 
Builders and Contractors (ABC), generally agreed. ABC emphasized that 
the regulations implementing E.O. 11246 impose substantial compliance 
costs on contractors by requiring them to develop, implement, and 
continuously update detailed AAPs. These costs are ultimately passed on 
to the Federal government through higher contract prices. ABC further 
contended that these regulatory requirements operated as a barrier to 
entry for small businesses that lack the resources to hire specialized 
consultants, human resources personnel, or legal counsel to maintain 
compliant AAPs. According to ABC, increases in regulatory burden 
correlated with declining small-business participation in Federal 
contracting, reducing competition and driving up prices.
    State attorneys general likewise commented that regulations 
implementing E.O. 11246 ``create barriers to entry that newer or 
smaller market participants cannot surmount'' because they ``may simply 
not be sophisticated enough to make it through the complicated maze of 
affirmative action rules, plans, and audits or cannot afford the 
additional financial costs associated with compliance.'' The Department 
finds persuasive ABC's evidence that the regulations impose 
disproportionate burdens on smaller firms, reduce competition for 
government contracts, and increase costs to the government. The 
Department expects that rescinding these regulations would increase 
competition, which could result in cost savings to the government and 
taxpayers. Other commenters took the opposite view. For example, NWLC 
asserted that E.O. 11246 and its implementing regulations improve 
contracting efficiency because they are ``critical mechanisms'' for 
ensuring that contractors access a wider pool of talent. The Department 
disagrees. Contractors have strong incentives to recruit and retain 
qualified workers from the broadest possible labor pool. The Department 
finds no persuasive basis for concluding that contractors would 
otherwise forgo qualified talent absent race- or sex-based employment 
goals. And commenters have not identified any.\45\
---------------------------------------------------------------------------

    \45\ Unlawful discrimination remains prohibited and subject to 
enforcement under Federal civil rights statutes and E.O. 14173, 
which directs contracting agencies to enforce Federal 
nondiscrimination standards against contractors through the 
procurement process.
---------------------------------------------------------------------------

    To the contrary, the E.O. 11246 affirmative action regulations 
diminish the role of merit and job-related qualification in requiring 
contractors to consider sex- and race-based employment goals and 
related requirements. E.O. 14398 discusses the inefficiencies of 
consideration of race and sex as opposed to merit in Federal 
contractors' personnel decisions and the costs such inefficiencies pass 
on to the Federal Government.\46\ The Department received over 300 
similarly worded comments arguing that the regulations ``have long 
forced federal contractors to make hiring and promotion decisions based 
on race and sex rather than merit.'' One woman who believes she was 
passed over for promotion based on her race stated that she has ``seen 
many examples of incompetency and rampant costs simply because hiring 
and contracts were based on race or sex rather than qualifications.'' 
State attorneys general explained that when government mandates require 
employers to prioritize characteristics such as race or sex--
characteristics unrelated to skills or aptitude--the relative 
importance of merit-based considerations is diminished, with attendant 
costs to productivity and efficiency.
---------------------------------------------------------------------------

    \46\ Addressing DEI Discrimination by Federal Contractors, Sec. 
1, 91 FR 16147 (Mar. 31, 2026).
---------------------------------------------------------------------------

    Some commenters, including labor organization and advocacy groups, 
argued that rescinding regulations requiring contractors to take action 
to meet race- and sex-based employment goals will result in fewer 
qualified minorities and women being hired or promoted. The Department 
disagrees. There are many talented, hardworking women and minority 
workers who succeed based on their qualifications and merit and would 
be hired or promoted regardless of whether contractors are subject to 
race- or sex-based employment goals. As noted above, the existence of 
race- and sex-based employment goals may undermine the standing of 
those individuals by calling into question whether their achievements 
are attributable to merit or to regulatory mandates.
    NWLC relied in part on a General Services Administration survey 
purporting to show positive associations between diversity, equity, and 
inclusion efforts and workplace well-being. The Department finds this 
evidence unpersuasive. The survey is based on subjective self-reported 
responses, and it does not examine the specific regulatory requirements 
at issue here--namely, compliance with government-imposed race- and 
sex-based employment goals. It does not provide a reliable basis for 
evaluating the economic or competitive effects of the E.O. 11246 
regulatory framework.
    The AFL-CIO further warned that ``[w]ith the removal of these 
procedures, contractors will have a much more complicated and 
potentially costly regulatory environment where they will need to be 
compliant with a host of state and local laws instead of the 
predictable federal requirements.'' But E.O. 11246 did not preempt 
state and local anti-discrimination laws with a common purpose. See 
Colo. Anti-Discrimination Comm'n v. Cont'l Airlines, 372 U.S. 714, 725 
(1963) (``It is impossible for us to believe that the Executive 
intended for its orders to regulate air carrier discrimination among 
employees so pervasively as to preempt state legislation intended to 
accomplish the

[[Page 54464]]

same purpose.''). The regulations implementing E.O. 11246 do not 
displace State or local employment and contracting laws that do not 
conflict with them, and contractors are required to comply with those 
laws regardless of whether Federal regulations remain in effect. 
Moreover, as several state attorneys general explained, the Federal 
regulatory framework has increasingly conflicted with state law. States 
including Indiana, Ohio, Florida, and Texas prohibit employers 
contracting with those states to have race- or sex-based hiring 
preferences of any sort. Those anti-discrimination provisions conflict 
with E.O. 11246 regulations that require employers to apply every good 
faith effort to satisfy race- and sex-based employment goals. As a 
result, it is the continued existence of E.O. 11246 regulations that 
creates needless confusion and tension with state law.
3. Effects on Employment Discrimination
    Some commenters asserted that rescinding the regulations 
implementing E.O. 11246 will result in increased employment 
discrimination against minorities and women by contractors, contending 
that the enforcement framework established under Title VII of the Civil 
Rights Act of 1964 is insufficient to deter or remedy such 
discrimination.
    In particular, these commenters argued that E.O. 11246 
nondiscrimination regulations are broader in scope and applicability 
than civil rights laws enacted by Congress. For instance, they noted 
that Title VII does not apply to small businesses with fewer than 15 
employees, whereas the E.O. 11246 nondiscrimination regulations apply 
to such small businesses, as long as they have more than $10,000 in 
Federal contracts. Commenters also noted that E.O. 11246 had additional 
protections compared to Title VII. For example, the E.O. 11246 
regulations included more details about what constitutes sex 
discrimination under the regulations and included sexual orientation 
and gender identity as protected bases.
    As some commenters noted, the E.O. 11246 regulations also prohibit 
contractors from taking adverse employment actions against applicants 
or employees who inquire about, discuss, or disclose information about 
their pay or their co-workers' pay, subject to certain limitations. The 
E.O. 11246 regulations' administrative enforcement mechanism is also 
more expedient than Title VII's enforcement framework through the 
Federal courts, where the defendant has substantially greater rights. 
These points, however, only reinforce the Department's determination 
that many aspects of OFCCP's nondiscrimination regulations conflict 
with Title VII. See Section III(B)(3)(a).
    The Federal Government will continue to enforce nondiscrimination 
requirements outside the Title VII framework through the procurement 
process. For example, E.O. 14173 directs agencies to combat illegal 
private-sector DEI preferences, mandates, policies, programs, and 
activities. Executive Order 14398 requires procuring agencies to ensure 
that contractors do not engage in unlawful race-based discrimination, 
placing enforcement responsibility with the contracting agencies 
themselves rather than OFCCP. Violation of this clause can lead to 
contract cancellation or debarment. Further, Federal agencies have long 
enforced nondiscrimination requirements in analogous contexts, 
including under Title VI for recipients of Federal financial 
assistance. Agency oversight over their own programs has operated for 
decades and provides a familiar and workable mechanism for addressing 
unlawful discrimination. Accordingly, the Department concludes that 
rescission of the E.O. 11246 nondiscrimination regulations will not 
weaken protections against unlawful discrimination and will instead 
align Federal procurement enforcement with established statutory 
frameworks and principles of agency accountability.
    Commenters also noted that while the EEOC investigates charges of 
discrimination under Title VII, the Department conducted E.O. 11246 
compliance evaluations in addition to complaint investigations. During 
these compliance evaluations, the Department reviewed contractors' 
records and employment activity data (e.g., pay and hiring data) to 
determine whether contractors were meeting their nondiscrimination and 
affirmative action requirements. The commenters believed that these 
compliance evaluations allowed the Department to uncover and remedy 
discrimination that would otherwise remain undetected.
    The Department also received several comments which asserted 
rescinding the E.O. 11246 regulations' data collection and affirmative 
action requirements would weaken discrimination protections. Some 
commenters asserted that these requirements protected all workers, not 
just minorities and women. Commenters also believed that these 
requirements ensured that contractors were undertaking proactive, 
regular analyses of their workplace policies to identify and remedy 
discriminatory barriers to equal employment opportunity.
    The Department carefully reviewed these comments and disagrees with 
these commenters. First, commenters' concerns about weakening 
protections and stopping E.O. 11246 compliance evaluations are 
unfounded. In addition to Title VII, contractors are subject to 
extensive employment discrimination laws at the local and state level. 
Further, while the Department conducted compliance evaluations pursuant 
to the E.O. 11246 regulations, it typically reviewed less than 2% of 
the contractor universe each year. As a matter of policy, the 
Department largely limited its compliance evaluations to larger 
contractors who already fall under Title VII's employee thresholds.\47\ 
Despite the extensive burden imposed by these compliance evaluations, 
the Department issued E.O. 11246 discrimination findings in 3% of 
cases. Even when discrimination was alleged, contractors often disputed 
the findings, asserting, for example, that the Department failed to 
adequately account for non-discriminatory reasons for hiring or pay 
disparities.
---------------------------------------------------------------------------

    \47\ DOL's scheduling methodologies are available at <a href="https://www.dol.gov/agencies/ofccp/scheduling/Methodologies">https://www.dol.gov/agencies/ofccp/scheduling/Methodologies</a>. (Per DOL's most 
recent methodology, ``Methodology for Developing the Supply and 
Service Scheduling List FY 2025, Release--1,'' employee count was 
one of numerous criterion used to determine the eligible pool of 
contractors. Specifically, for each parent company with at least one 
contract of $50,000 anywhere in the organization, all U.S. 
establishments with at least 400 employees and U.S. territories with 
at least 50 employees were included in the eligible pool of 
contractors.).
---------------------------------------------------------------------------

    The Department also notes that one of the reasons for rescinding 
the E.O. 11246 regulations is to ensure that contractors are not using 
the E.O. 11246 requirements to justify illegal discrimination against 
workers. While the E.O. 11246 nondiscrimination obligations were 
designed to cover all protected groups, the regulations required 
affirmative action regarding only women and minorities. In effect, 
these requirements induced contractors to create policies and programs 
designed to account for race and sex in hiring and personnel decisions. 
In addition to being unlawful, using race- and sex-based preferences 
diminishes the importance of individual merit when making employment 
decisions. Several commenters agreed with this position, stating that 
the E.O. 11246 regulations conflicted with prohibitions against race 
and sex-based decision making or required contractors to prioritize 
demographic targets over individual merit and qualifications, 
ultimately undermining the

[[Page 54465]]

foundational American principle of equal treatment.\48\ By rescinding 
the E.O. 11246 regulations, the Department is restoring merit-based 
opportunity for the Federal contractor workforce and is ensuring that 
contractors are not engaging in discriminatory race- and sex-based 
preferences in their employment processes. Rather than weakening 
protections, the rescission is ensuring that civil rights protections 
extend to all workers.
---------------------------------------------------------------------------

    \48\ Note that some commenters were similarly concerned about 
the impact of the regulations on Federal contracting more broadly, 
noting concerns about race- and sex-based preferences in awarding 
contracts. While the E.O. 11246 regulations did contain some pre-
award provisions at 41 CFR 60-1.29, DOL's enforcement focused on the 
nondiscrimination and affirmative action requirements for existing 
contractors.
---------------------------------------------------------------------------

4. Regulatory Alternative and Reliance Interests
    The Department considered as a regulatory alternative rescinding 
the affirmative action requirements of the E.O. 11246 regulations while 
retaining OFCCP-administered nondiscrimination requirements that are 
consistent with Federal civil rights law and that could be authorized 
under the Procurement Act's authority to promote economy and efficiency 
in Federal contracting. Under this approach, OFCCP would have continued 
to enforce prohibitions on unlawful discrimination through the use of 
procurement remedies despite the elimination of affirmative action 
obligations. The Department also considered as an alternative modifying 
the regulations to state that the utilization goals are purely 
aspirational and contractors have no obligation to take action to meet 
race- and sex-based goals.
    The Department concludes, however, that these alternatives are not 
available. Executive Order 14173 expressly revoked E.O. 11246 and 
withdrew the President's prior sub-delegation of Procurement Act 
authority to the Department of Labor for enforcement of 
nondiscrimination requirements in Federal contracting. Because the 
Department no longer possesses delegated authority under the 
Procurement Act to generally enforce contractor nondiscrimination 
obligations, it lacks a lawful basis to retain any piece of the OFCCP-
administered nondiscrimination regulatory framework tied to E.O. 11246. 
Accordingly, partial rescission is not a legally viable alternative.
    The Department also considered potential reliance interests 
implicated by rescission of the E.O. 11246 regulations. But E.O. 11246 
has been revoked and there can be no legitimate reliance on authorities 
that are no longer in force.
    To the extent employees and applicants of contractors have a 
legitimate reliance interest in continued protection from unlawful 
employment discrimination, that interest is preserved because Title VII 
provides a comprehensive and well-established framework prohibiting 
employment discrimination. In addition, E.O. 14173 directs Federal 
procuring agencies to ensure that contractors do not engage in unlawful 
discrimination, and those agencies retain authority to enforce 
nondiscrimination requirements within their respective procurement 
programs. The Department therefore concludes that rescission will not 
diminish protections against unlawful discrimination. To the extent any 
individual may claim a reliance interest in being hired or promoted 
because of the E.O. 11246 affirmative action regulations, the 
Department concludes that such an individual has no cognizable reliance 
interest in having his or her race or sex be a consideration in 
employment opportunities.
5. Other Comments
    The Department received several comments that generally supported 
or opposed the rescission without providing substantive comments on the 
proposal. The Department also received a comment requesting guidance on 
how contractors can comply with E.O. 14173's requirement to certify 
compliance with all applicable Federal anti-discrimination laws as well 
as guidance on how to ensure that employment practices are non-
discriminatory. In response, the Department notes that the E.O. 11246 
regulations were not promulgated pursuant to E.O. 14173 and that, in 
any event, compliance with E.O. 14173 is outside the scope of this 
rulemaking.
    Some commenters presented alternatives to the rescission, including 
modifying E.O. 11246 rather than rescinding it altogether or replacing 
E.O. 11246 with a new Executive Order. The Department also received a 
comment claiming that the severability clause located at 41 CFR 60-1.48 
should allow the Department to maintain the regulations related to pay 
transparency, despite the Department's proposed rescission of the 
remaining regulations, as pay transparency is facially neutral on the 
subjects of race, color, religion, sex, sexual orientation, gender 
identity, and national origin. The Department declines to adopt these 
recommendations. With the revocation of E.O. 11246, the Department no 
longer has legal authority to enforce the E.O. 11246 implementing 
regulations. Therefore, the Department is rescinding the E.O. 11246 
implementing regulations in their entirety. The pay transparency 
provisions at 41 CFR 60-1.4(a)(3), 60-1.4(b)(1)(3) and 60-1.35 are also 
part of this rescission, as they were issued as amendments to the E.O. 
11246 regulations.\49\
---------------------------------------------------------------------------

    \49\ The pay transparency regulations were adopted pursuant to 
an amendment to section 202 of E.O. 11246. 80 FR 54934 (Sept. 11, 
2015).
---------------------------------------------------------------------------

    Alliance Defending Freedom (ADF) asserted that E.O. 11246 and its 
implementing regulations raised concerns for religious organizations 
seeking to serve as Federal contractors and subcontractors. 
Specifically, ADF asserted that many religious organizations' sincerely 
held beliefs precluded them from complying with certain aspects of E.O. 
11246 and its implementing regulations, particularly those related to 
sex discrimination, sexual orientation, and gender identity. ADF 
believed that the Department's past rulemaking removed religious 
organizations' protections to exercise their religious beliefs when it 
came to personnel decisions and caused confusion about the scope of 
E.O. 11246's religious exemption provision. ADF also believed that 
rescinding the regulations would help address these concerns for 
religious organizations. Although the NPRM did not directly address 
these issues, the Department agrees that rescinding the E.O. 11246 
implementing regulations will address confusion and uncertainty about 
the scope of the regulations and their alignment with other laws. It is 
the Department's view that the revocation of E.O. 11246 and the 
rescission of its implementing regulations eliminate the need for a 
religious employer exemption from E.O. 11246 in the first place. Since 
E.O. 11246 regulations no longer have the force of law, religious 
employers who are contractors do not need an exemption and may continue 
to exercise their sincerely held religious beliefs in the employment of 
individuals in their businesses, consistent with existing Federal civil 
rights law.
    Another commenter also suggested that the Department revise its 
regulatory definition of ``minority'' at 41 CFR 60-4.3(a)1(d) because 
it believed that the criteria about who belongs in this group is 
unclear, specifically as to who belongs to a Hispanic minority group. 
In response, the Department notes that this definition will be 
rescinded, as it is part of the E.O. 11246 regulations. To the extent 
that this definition needs to be revisited in other parts of the 
agency's

[[Page 54466]]

programs, such changes will be addressed separately from this 
rulemaking.
    The commenter also recommended that the Department conduct a review 
of all rules to ensure compliance with the policy objectives of the 
current administration. In response, the Department notes that it has 
and will continue to review its rules for consistency with the policy 
objectives of the current administration. To the extent that the 
Department determines that additional regulatory changes are necessary, 
those changes will be pursued in a separate rulemaking.
    Another commenter suggested that the Department reconsider 
rescinding the UGESP provisions at 41 CFR part 60-3. This commenter 
believed that UGESP promotes meritocracy in hiring and promotions, as 
it provides guidelines for determining which practices are job related 
and consistent with business necessity. In response, the Department 
notes that 41 CFR part 60-3 will be rescinded in its entirety, as these 
guidelines are part of the E.O. 11246 regulations. However, as noted in 
the NPRM and in this final rule, this rescission does not affect other 
agencies' application and interpretation of the UGESP provisions.\50\
---------------------------------------------------------------------------

    \50\ The Department of Justice's Office of Legal Counsel issued 
a memorandum on June 9, 2026, concluding that the UGESP ``embrace an 
unconstitutional reading of Title VII.'' DOJ, Constitutionality of 
Disparate-Impact Liability Under Title VII, 50 Op. O.L.C. _, at 2 
(June 9, 2026). Although the Department relied on different grounds 
in the NPRM for proposing to rescind part 60-3, namely the 
revocation of E.O. 11246, the OLC opinion further supports the 
Department's decision to do so.
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IV. Procedural Issues and Regulatory Review

A. Overview of Executive Orders

    Executive Order 12866, ``Regulatory Planning and Review,'' 58 FR 
51735 (Oct. 4, 1993), requires agencies, to the extent permitted by 
law, to (1) propose or adopt a regulation only upon a reasoned 
determination that its benefits justify its costs (recognizing that 
some benefits and costs are difficult to quantify); (2) tailor 
regulations to impose the least burden on society, consistent with 
obtaining regulatory objectives, taking into account, among other 
things, and to the extent practicable, the costs of cumulative 
regulations; (3) select, in choosing among alternative regulatory 
approaches, those approaches that maximize net benefits; (4) to the 
extent feasible, specify performance objectives, rather than specifying 
the behavior or manner of compliance that regulated entities must 
adopt; and (5) identify and assess available alternatives to direct 
regulation, including providing economic incentives to encourage the 
desired behavior, such as user fees or marketable permits, or providing 
information upon which choices can be made by the public.
    Section 6(a) of E.O. 12866 also requires agencies to submit 
``significant regulatory actions'' to the Office of Information and 
Regulatory Affairs (OIRA) for review. In accordance with E.O. 12866, 
the Department has determined that this final rule constitutes a 
``significant regulatory action'' because it would have an annual 
effect on the economy of $100 million or more. See E.O. 12866 sec. 
3(f)(1). Accordingly, this final rule was submitted to OIRA for review 
under E.O. 12866. Below is an overview of the Department's regulatory 
impact analysis conducted pursuant to E.O. 12866.
    Executive Order 13563, ``Improving Regulation and Regulatory 
Review,'' 76 FR 3821 (Jan. 21, 2011), directs agencies to propose or 
adopt a regulation only upon a reasoned determination that its benefits 
justify its costs; it is tailored to impose the least burden on 
society, consistent with achieving the regulatory objectives; and in 
choosing among alternative regulatory approaches, the agency has 
selected those approaches that maximize net benefits.
    Executive Order 14192, ``Unleashing Prosperity Through 
Deregulation,'' was issued on January 31, 2025.\51\ This rule is 
considered a deregulatory action under E.O. 14192. Using a perpetual 
time horizon to allow for cost comparisons under that order, the 
Department estimates that the annualized cost savings amount to $996.37 
million in 2024 dollars, using a 7 percent discount rate.
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    \51\ 90 FR 9065 (Feb. 6, 2025).
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    Pursuant to Subtitle E of the Small Business Regulatory Enforcement 
Fairness Act of 1996, also known as the Congressional Review Act (5 
U.S.C. 801 et seq.), OIRA has designated this rule as a ``major rule,'' 
as defined by 5 U.S.C. 804(2).

B. Review Under E.O. 12866

1. Executive Summary of Analysis
    This final rule rescinds regulations implementing E.O. 11246, 
consistent with E.O. 14173's revocation of that authority. Executive 
Order 14173, issued on January 21, 2025, revoked E.O. 11246 in its 
entirety and provided a 90-day transition period for compliance with 
existing regulations. That transition period has now expired. The 
rescission eliminates compliance obligations that previously applied to 
107,165 supply and service entities and 9,982 construction contractors, 
employing approximately 32 million workers. The benefits apply most 
directly to 9,982 construction contractors and a subset of supply and 
service contractors (101,850 entities) that meet the affirmative action 
thresholds (totaling approximately 111,832 contractor entities).\52\
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    \52\ As noted above, the affirmative action thresholds for non-
construction contractors are at least 50 employees and a Federal 
contract of at least $50,000 and for construction contractors, a 
Federal contract of more than $10,000 and any number of employees.
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    In the NPRM, the Department estimated annual cost savings of 
$996.37 million based on an estimated reduction of 9,875,221 hours 
related to the E.O. 11246 requirements (e.g., recordkeeping, reporting, 
and compliance costs). See 90 FR 28477. Commenters, however, identified 
additional sources of cost savings and related benefits not fully 
captured in that estimate. For example, some commenters, including ABC 
and several state attorneys general, asserted that rescission would 
increase participation among contractors, particularly small and 
medium-sized entities, thereby enhancing competition and generating 
downstream cost savings in Federal procurement. Other commenters 
emphasized difficult-to-quantify benefits, including improved hiring 
efficiency and productivity gains resulting from a renewed focus on 
merit-based employment decisions rather than efforts to conform 
workforces to demographic benchmarks. In light of these comments, the 
Department recognizes that the benefits of the final rule are likely 
broader than the quantified NPRM savings alone and, therefore, 
considers a wider range of economic and operational benefits as 
illustrative in its final analysis.
    The Department maintains its estimate of $996.37 million in 
quantifiable annual cost savings from reduced compliance burdens, as 
set forth in the NPRM.\53\ At the same time, the Department believes 
that the overall cost savings associated with rescission are in all 
likelihood substantially greater. For example, commenters identified 
additional categories of economic effects not captured in the paperwork 
burden estimate, including (1) reduced litigation liability and risk; 
(2) improved hiring efficiency and labor

[[Page 54467]]

productivity; and (3) reduced Federal procurement costs through 
increased competition.
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    \53\ Specifically, this final rule estimates $996,373,776 in 
annual cost savings. This total differs slightly from the NPRM 
estimate of $996,373,735 due to rounding.
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    The Department lacks sufficient data to quantify these additional 
effects with a reasonable degree of confidence. Accordingly, the 
Department discusses these impacts qualitatively and, where 
appropriate, provides illustrative calculations based on stated 
assumptions to convey their potential magnitude.
    The only cost of the final rule is rule familiarization, which is 
likely negligible because the Department has not enforced the 
regulations for over a year following the revocation of E.O. 11246 in 
January 2025. Regulated entities have already adjusted their behavior 
and have no need to review this final rule.
a. Need for Regulatory Actions
    The rescission of the E.O. 11246 implementing regulations is 
necessary to implement President Trump's mandate in E.O. 14173, which 
revoked the E.O. 11246 authority. In addition to E.O. 14173's 
revocation of E.O. 11246, the Department identified several other 
reasons for rescinding the regulations, including legal vulnerabilities 
related to the affirmative action requirements, improving the 
efficiency of the Federal contracting process, decreasing employer 
burden, and providing regulatory certainty to contractors and other 
stakeholders by aligning the regulations with recent executive orders 
impacting the Department's enforcement. See 90 FR 28472, 28474-28477 
(July 1, 2025).
b. Regulatory Alternatives
    This final rule imposes the least regulatory burden on contractors, 
as it rescinds all of the E.O. 11246 requirements (see estimated cost 
savings below). Alternatives include maintaining the E.O. 11246 
implementing regulations or rescinding the affirmative action 
provisions while maintaining the nondiscrimination provisions. The 
Department considered these alternatives but concluded that these 
alternatives were not permissible because E.O. 14173 revoked the 
underlying E.O. 11246 authority in its entirety. Executive Order 14173 
also only provided for a 90-day period in which contractors could 
continue to comply with the current regulatory scheme. See E.O. 14173 
at Sec. 3(b)(i). This 90-day period has since passed. For that reason, 
rescinding the E.O. 11246 implementing regulations is the most 
appropriate regulatory action, as it aligns the regulations with the 
agency's legal authority and will provide clarity to stakeholders about 
their current obligations.
c. Baselines
    The baseline for this analysis assumes continued compliance with 
the rescinded regulations, including requirements to prepare and 
maintain annual AAPs, conduct demographic and statistical analyses, 
implement compliance-related practices across personnel processes 
(e.g., hiring, promotion, compensation, and recordkeeping), respond to 
compliance evaluations, and bear associated legal and operational 
risks.
    The entities affected by the final rule include supply and service 
contractors, construction contractors, and federally assisted 
construction contractors and subcontractors meeting applicable employee 
and contract dollar thresholds, across a wide range of industries. 
Compliance burdens are particularly significant for contractors 
operating multiple entities and for firms with limited administrative 
capacity relative to fixed regulatory costs.
    Affected Universe: The affected universe includes 107,165 supply 
and service entities and 9,982 construction contractors. Employment at 
covered entities is estimated at approximately 32 million workers. 
These estimates are derived from available EEO-1 and USA Spending 
data.\54\ The benefits apply most directly to 9,982 construction 
contractors and a subset of supply and service contractors (101,850 
entities) that meet the affirmative action thresholds (totaling 
approximately 111,832 contractor entities). While construction 
contractors do not develop written AAPs, they are subject to the 
affirmative action requirements at 41 CFR part 60-4. Our analysis 
assumes that implementing and documenting these requirements imposes 
similar burdens as developing and maintaining a written AAP.
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    \54\ U.S. Equal Employment Opportunity Commission, EEO-1 
Employer Information Report Statistics, available at <a href="https://www.eeoc.gov/data/eeo-1-employer-information-report-statistics">https://www.eeoc.gov/data/eeo-1-employer-information-report-statistics</a> 
(estimates based on available 2020-2022 EEO-1 data); USA Spending 
Database, available at <a href="https://www.usaspending.gov/">https://www.usaspending.gov/</a> (estimates based 
on 2021-2023 USA Spending data). Following the revocation of E.O. 
11246, OFCCP no longer has any use for EEO-1 data.
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d. Potential Effects on Contract and Employment Distribution
    The rescission of the E.O. 11246 implementing regulations may 
affect the distribution of Federal contract awards across firms and, 
correspondingly, employment opportunities across workers. Reducing 
affirmative action compliance obligations may lower barriers to entry 
for some firms that were previously deterred from pursuing Federal 
contracting opportunities due to the costs, administrative complexity, 
or perceived litigation risks associated with the regulations.
    These effects may be especially relevant for smaller firms and 
firms with more limited human resources, legal, or compliance 
infrastructure. As ABC and other commenters noted, preparing written 
affirmative action programs, conducting utilization analyses, 
maintaining documentation systems, and managing related compliance 
activities impose proportionally larger fixed costs on smaller 
entities. Such a pattern is consistent with empirical research finding 
that fixed regulatory compliance costs disproportionately reduce market 
participation by smaller firms.\55\ To the extent smaller firms 
previously elected not to compete for Federal contracts, or limited 
their participation in covered contracting markets, rescission may 
increase their willingness or ability to participate in Federal 
procurement. As a result, some contract awards may shift toward firms 
that were previously less likely to compete under the E.O. 11246 
regulatory framework.
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    \55\ See, e.g., Shikhar Singla, ``Regulatory Costs and Market 
Power'' (2023) (finding that increases in regulatory costs cause 
small firms to become smaller and large firms to become larger, 
contributing to increased concentration and reduced small firm 
participation); U.S. Senate Committee on Small Business and 
Entrepreneurship, ``A Troubling Trend'' (2023) (documenting an 
approximately 50 percent decline in the number of small business 
vendors participating in the Federal marketplace, from roughly 
144,000 in FY2008 to between 65,000 and 75,000 by the early 2020s).
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    Any such shifts could also affect the distribution of employment 
opportunities among workers employed by participating firms. For 
example, because minority- and women-owned businesses are 
disproportionately concentrated among smaller firms, barriers that fall 
most heavily on small businesses may also disproportionately limit 
minority- and women-owned enterprises' participation in Federal 
contracting.\56\ The Department lacks sufficient data to quantify the 
magnitude of any resulting shifts in

[[Page 54468]]

contract awards or employment outcomes.
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    \56\ See U.S. Census Bureau, Annual Business Survey (2025 
release, reporting 2023 business ownership data), available at 
<a href="https://www.census.gov/programs-surveys/abs.html">https://www.census.gov/programs-surveys/abs.html</a>, and U.S. Census 
Bureau, Nonemployer Statistics (2023), available at <a href="https://www.census.gov/data/datasets/2023/econ/nonemployer-statistics/2023-ns.html">https://www.census.gov/data/datasets/2023/econ/nonemployer-statistics/2023-ns.html</a>. The data indicate that women-owned and minority-owned firms 
are disproportionately concentrated within smaller business size 
classes and among nonemployer businesses.
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e. Benefits of Rescission
    This final rule rescinds the regulations implementing E.O. 11246, 
consistent with the revocation of the underlying Executive Order. The 
Department has examined the economic effects of this action and 
concludes that the rescission will result in substantial cost savings 
for contractors, as well as downstream benefits to Federal procurement 
markets and taxpayers.
    The anticipated benefits of the rule go beyond quantifiable PRA-
based cost savings for contractors. By eliminating the regulatory 
burdens of affirmative action requirements, the Department expects to 
foster increased competition and participation among contractors, 
particularly benefiting small and medium-sized businesses. This shift 
is expected to lead to lower Federal contracting costs, improved 
contractor performance, and a more efficient labor market, ultimately 
enhancing value for taxpayers while maintaining adherence to essential 
nondiscrimination laws.
2. Quantifiable Compliance Cost Savings
    The July 1, 2025 NPRM estimated that the regulations implementing 
E.O. 11246 imposed approximately $996.37 million \57\ in quantifiable 
annual compliance costs, based on an estimated annual time burden of 
9,875,221 hours. See 90 FR 28477.
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    \57\ This final rule estimates $996,373,776 in quantifiable 
annual cost savings. This total differs slightly from the NPRM 
estimate of $996,373,735 due to rounding.
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    The Department retains this estimate in the final rule as a measure 
of direct, quantifiable compliance costs. Commenters did not dispute 
the underlying methodology or the resulting estimate. This estimate 
derives from case data covering FY 2022 through 2024 and reflects the 
estimated time burden for the regulated community associated with 
preparing and maintaining written AAPs, demographic and statistical 
analyses, recordkeeping and reporting obligations, third-party 
disclosure and data submission requirements, audit response and 
investigation costs, and monetary remedies associated with conciliation 
agreements.
    In computing the value of contractor time, the Department generally 
used a fully loaded hourly wage rate of $99.11, which is consistent 
with prior analyses.\58\ A higher rate of $105.49 per hour is applied 
to the AAP certification and Functional Affirmative Action Program 
(FAAP) burdens, consistent with prior analyses.\59\
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    \58\ The calculations are based on Bureau of Labor Statistics 
wage estimates of $77.15 per hour for Human Resources Managers and 
$55.15 per hour for Management Analysts. The calculation uses a 60/
40 split between Human Resources Managers and Management Analysts, 
which equals $68.35. Fringe benefits and overhead costs are 
calculated as 45 percent of wages. $68.35 x 1.45 = $99.11. See 
Bureau of Labor Statistics, Occupational Employment Statistics, 
Occupational Employment and Wages, May 2024, <a href="https://www.bls.gov/oes/current/oes_nat.htm">https://www.bls.gov/oes/current/oes_nat.htm</a>.
    \59\ The AAP certification and FAAP calculations described below 
assume Human Resources Managers will play a larger role in these 
compliance activities and use an 80/20 split between Human Resources 
Managers and Management Analysts, which equals $72.75. Fringe 
benefits and overhead costs are calculated as 45 percent of wages. 
$72.75 x 1.45 = $105.49. See Bureau of Labor Statistics, 
Occupational Employment Statistics, Occupational Employment and 
Wages, May 2024, <a href="https://www.bls.gov/oes/current/oes_nat.htm">https://www.bls.gov/oes/current/oes_nat.htm</a>.
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a. Supply and Service Contractors
    The final rule eliminates requirements applicable to approximately 
101,850 covered supply and service contractor establishments.
    Recordkeeping. Contractors are no longer required to develop, 
update, and maintain written E.O. 11246 AAPs. Prior to the revocation 
of E.O. 11246, first-time contractors (approximately 1,019 annually) 
spent an estimated 108 hours developing an E.O. 11246 AAP, while 
existing contractors (approximately 100,832 establishments) spent 47 
hours annually updating their programs. All covered establishments also 
incurred ongoing maintenance burdens (47 hours annually). In addition, 
contractors with 1 to 14 employees incurred limited recordkeeping 
obligations under 41 CFR part 60-3 (approximately 1,019 establishments 
at 2 hours each). In total, rescission eliminates approximately 
9,638,144 hours of annual recordkeeping burden, valued at $955,236,452.
    Reporting. Historically, OFCCP conducted approximately 845 supply 
and service compliance evaluations each year. Each such compliance 
evaluation imposed an estimated 37.5 hours of burden on the contractor 
to respond to the scheduling letter. Applying a proportional 
attribution to E.O. 11246 requirements, rescission eliminates 
approximately 22,182 hours of reporting burden, valued at $2,198,458 
annually.
    AAP Certification. New contractors (approximately 1,019 annually) 
previously spent approximately 0.42 hours certifying their compliance 
with the AAP requirements, while existing contractors (approximately 
100,832 establishments) spent approximately 0.13 hours annually 
recertifying. The final rule eliminates approximately 13,536 hours of 
burden, valued at approximately $1,427,913 annually (at $105.49 per 
hour).
    Conciliation Costs. Contractors resolving compliance findings 
through E.O. 11246 conciliation agreements incurred monetary costs. 
Based on recent agreements, the Department estimates approximately 
$17,443,922 in annual conciliation-related costs associated with E.O. 
11246 requirements that would be eliminated. Additional E.O. 11246 
complaint-related conciliation costs are estimated at $104,059 
annually.
    Complaint Investigations. Approximately 15 E.O. 11246 complaint 
investigations annually imposed an estimated 192.4 hours of burden per 
case, resulting in 2,950 hours eliminated, valued at $292,408 annually.
    Operating Costs. Paper submission costs associated with supply & 
service compliance evaluations (copying and mailing) are estimated at 
$9,603 annually.
    Total suppl

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