Nondiscrimination in Federally-Assisted Programs of the Department of Veterans Affairs

SUPPLEMENTARY INFORMATION:

I. Background

VA proposes  ⁽¹⁾ to rescind portions of its regulations promulgated pursuant to Title VI, codified at 42 U.S.C. 2000d et seq., to more closely align its regulations to Title VI, which prohibits intentionally discriminatory conduct. There are serious statutory and constitutional concerns with the legality of VA's Title VI regulations that go beyond intentional discrimination by prohibiting conduct that has an unintentional disparate impact. This rule accordingly would rescind those portions of the regulations that prohibit conduct having a disparate impact, which are in considerable tension with both the statute and the Constitution and do not sufficiently serve the public interest.

Specifically, this rule proposes to remove the full text of 38 CFR 18.3(b)(2), which prohibits the utilization of criteria or methods of administration which have the effect of subjecting individuals to discrimination because of their race, color, or national origin. This rule would also remove uses of the phrase "or effect" from § 18.3(b)(3). This rule would remove a related example in paragraph (d) of Appendix B of subpart A of part 18 and would rescind the full text of § 18.3(b)(6). This rule further would rescind the full text of § 18.3(d)(2), which addresses employment practices subject to Federal financial assistance. VA would also make unrelated, minor technical changes to part 18.

The rule's proposed revisions conform to E.O. 14281, Restoring Equality of Opportunity and Meritocracy, 90 FR 17537 (Apr. 28, 2025). That E.O. states that "[i]t is the policy of the United States to eliminate the use of disparate-impact liability in all contexts to the maximum degree possible to avoid violating the Constitution, Federal civil rights laws, and basic American ideals." Id. Sections 4 and 5 of the E.O., respectively, directed all executive departments and agencies (agencies) to deprioritize enforcement of all statutes and regulations to the extent they include disparate-impact liability, and also directed the Attorney General to, among other things, initiate appropriate action to repeal or amend the implementing regulations for Title VI for all agencies to the extent they contemplate disparate-impact liability. Id.

On December 10, 2025, the Department of Justice (DOJ) amended its Title VI regulations to eliminate disparate-impact liability. See 90 FR 57141. VA is similarly proposing to amend its Title VI regulations. This proposed rule makes clear that VA's Title VI regulations would not impose disparate-impact liability but would prohibit only intentional discrimination.

A. Statutory Authority

Title VI, as amended, provides: "No person in the United States shall, on the ground of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance." 42 U.S.C. 2000d. Title VI also directs Federal departments and agencies that extend Federal financial assistance to effectuate the provisions of Title VI by issuing rules, regulations, or orders of general applicability. 42 U.S.C. 2000d-1. Section 2000d specifically prohibits intentional discrimination and makes no reference to unintentional disparate effects or impact. See v. Sandoval, 532 U.S. 275, 280 (2001) ("[I]t is . . . beyond dispute-and no party disagrees-that [Title VI] prohibits only intentional discrimination."). The statute does not explicitly provide any Federal department or agency with authority to prohibit conduct having an unintentional disparate impact, and Congress has not amended Title VI to impose disparate-impact liability.

B. VA's Title VI Regulatory History

VA's Title VI implementing regulations are codified at 38 CFR part 18. These regulations, until DOJ's recent final rule, were consistent with those of DOJ as well as other agencies. On December 31, 1964, VA initially promulgated regulations in part 18 to effectuate Title VI. 29 FR 19301. This set of regulations included several references (§§ 18.3(b)(2) and 18.5(d), the latter of which was redesignated as current paragraph (d) of Appendix B to subpart A of part 18) to, or uses of, the "effect of" language in the "discrimination prohibited" provision of the rule. Id. On July 5, 1973, VA amended its regulations to add, in pertinent part, 38 CFR 18.3(b)(3), which added the "or effect" language; and § 18.3(b)(6), which introduced the "affirmative action" language to the regulations. 38 FR 17965. On November 25, 1977, VA amended its regulations, in pertinent part, to add 38 CFR 18.3(d)(1)-(2), which extended the rule to Federal financial assistance whose primary objective is not to provide employment. 42 FR 60144. On August 26, 2003, VA added language regarding "program or activity" to reflect the amendment of Title VI by the Civil Rights Restoration Act of 1987, Public Law 100-259, section 6. 68 FR 51369. Since then, VA has not made any substantive updates to its Title VI regulations.

C. Relevant Supreme Court Decision

The Supreme Court has held that Title VI does not prohibit facially neutral policies that result in disparate outcomes when there is no discriminatory intent. Rather, it prohibits only intentional discrimination. In 1978, the Supreme Court held that Congress intended Title VI to prohibit "only those racial classifications that would violate the Equal Protection Clause" if committed by a government actor. Regents of the Univ. of Cal. v. Bakke, 438 U.S. 265, 287 (1978) (Powell, J., announcing the judgment of the Court); id. at 325, 328, 352-53 (Brennan, White, Marshall, and Blackmun, JJ., concurring in part and dissenting in part); see also Students for Fair Admissions, Inc. v. President & Fellows of Harvard Coll., 600 U.S. 181, 198 n.2 (2023) ("SFFA"). Shortly before Bakke, the Supreme Court held that the Equal Protection Clause prohibits only intentional discrimination and that "a law or other official act" that has a "racially disproportionate impact" alone does not violate that Clause. Washington v. Davis, 426 U.S. 229, 239 (1976); see also Vill. of Arlington Heights v. Metro. Hous. Dev. Corp., 429 U.S. 252, 265 (1977) ("Proof of racially discriminatory intent or purpose is required to show a violation of the Equal Protection Clause."). Taken together, these Supreme Court cases establish that Title VI's statutory prohibition, like the Equal Protection Clause, extends only to intentional discrimination.

In 2001, the Supreme Court, in Alexander v. Sandoval, reaffirmed that settled understanding. 532 U.S. at 280 ("[I]t is . . . beyond dispute . . . that [Title VI] prohibits only intentional discrimination."). In Sandoval, the Supreme Court held that private plaintiffs lacked a private right of action to enforce DOJ's "disparate-impact regulations." Id. at 285-87. The Supreme Court had previously found a private cause of action to enforce Title VI's bar on intentional discrimination, id. at 279-80, but that conclusion did not extend to enforcing DOJ's "disparate-impact regulations." Id. at 285. As the Supreme Court explained, it was "clear" that "the disparate-impact regulations do not simply apply" the statutory prohibition, as the regulations "forbid conduct that [Title VI] permits," so it was equally "clear that the private right of action to enforce [Title VI] does not include a private right to enforce these regulations." Id. Although the Supreme Court in Sandoval "assume[d]," without deciding, that DOJ's disparate-impact regulations were valid, the Court explained that the regulations were in "considerable tension" with the Supreme Court's Title VI precedents. Similarly, the regulations did not "authoritatively" construe Title VI because the regulations "forbid conduct"-namely, policies that unintentionally result in a disparate impact-that Title VI "permits." Id. at 281-82, 284-85; see also id. at 286 n.6 ("[Title VI] permits the very behavior that the regulations forbid.").

Finally, in 2024, the Supreme Court overruled Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). See Loper Bright Enters. v. Raimondo, 603 U.S. 369, 409-12 (2024). In reaching that result, the Supreme Court made clear that "statutes . . . have a single, best meaning" that is " `fixed at the time of enactment.' " Id. at 400 ( quoting Wis. Cent. Ltd. v. United States, 585 U.S. 274, 284 (2018)). Thus, Title VI's bar on discrimination can have only one meaning. And under Supreme Court precedent, the single, best meaning of Title VI is that it "prohibits only intentional discrimination" and "permits" facially neutral policies that result in disparate outcomes so long as there is no discriminatory intent. Sandoval, 532 U.S. at 280, 286 n.6.

D. Executive Order 14281

On April 23, 2025, the President issued E.O. 14281, which restated the "bedrock principle of the United States . . . that all citizens are treated equally under the law." 90 FR 17537. The E.O. explained that this principle guarantees equality of opportunity, not equal outcomes, and promises that people are treated as individuals, not components of a particular race or group. Id.

That E.O. also explained that disparate-impact liability endangers this foundational principle, as disparate-impact liability all but requires individuals and businesses to consider race and engage in racial balancing to avoid potentially crippling legal liability. Id. Disparate-impact liability not only undermines our national values but also runs contrary to equal protection under the law and, therefore, violates our Constitution. Id.

The E.O. explained that "[i]t is the policy of the United States to eliminate the use of disparate-impact liability in all contexts to the maximum degree possible to avoid violating the Constitution, Federal civil rights laws, and basic American ideals." Id.

In any event, VA would have independently initiated steps toward making these proposed changes regardless of E.O. 14281. Even in the absence of E.O. 14281, in other words, VA would have initiated steps to eliminate the use of disparate-impact liability under Title VI. VA believes that all citizens should be treated equally under the law. Imposing disparate-impact liability endangers this objective. Disparate-impact liability also raises serious constitutional concerns, is in considerable tension with the original public meaning of Title VI, creates confusion, increases the costs of compliance, and does not serve the public interest.

E. Need for Rulemaking

VA's regulation at 38 CFR 18.3, entitled "Discrimination prohibited," contains several provisions that go beyond the statutory text and constitutional requirements by prohibiting facially neutral policies that have a disparate impact and in some instances encourage or even require unlawful discrimination labeled as "affirmative action." Section 18.3(b)(2) is the current regulation's general disparate-impact prohibition, which states that a "recipient . . . may not . . . utilize criteria or methods of administration which have the effect of subjecting individuals to discrimination because of their race, color, or national origin."

Beyond that general prohibition, § 18.3(b)(3) addresses a Federal-funding recipient's selection of the site or location of facilities and includes two references to "effect" that extend the scope of prohibited conduct to include conduct with unintentional disparate impact. Section 18.3(b)(6) concerns the use of "affirmative action," and provides that funding recipients may (and sometimes must) use race, color, or national origin to overcome unintentional disparate "effects." But this provision does not expressly specify that the funding recipient must narrowly tailor such use nor that this use must serve a compelling governmental interest, as is required to satisfy strict scrutiny. Section 18.3(d) addresses prohibited discriminatory employment practices, and paragraph (d)(2) extends beyond intentional discrimination to prohibiting conduct that "tends" to have a discriminatory effect. Finally, paragraph (d) of Appendix B of subpart A of part 18 provides an illustrative example of the use of disparate-impact liability in the selection and approval of projects or sites for the construction of a nursing home.

There are serious statutory and constitutional concerns with the legality of VA's Title VI disparate-impact regulations. VA also has serious policy concerns with its current disparate-impact regulations because they create confusion, undermine public confidence in the nation's civil rights laws and the rule of law, and produce burdensome litigation and compliance costs.

1. Serious Legal Concerns

There are serious statutory concerns as to whether Title VI authorizes the disparate-impact provisions of the current regulations. As the Supreme Court has made clear, Title VI prohibits "only intentional discrimination" and "permits" facially neutral policies that result in disparate outcomes when there is no discriminatory intent. Sandoval, 532 U.S. at 280, 286 n.6. That is the "single, best meaning" of Title VI. Loper Bright, 603 U.S. at 400. Given that VA's regulations were consistent with DOJ's regulations prior to recent amendments, Sandoval calls into serious doubt the legality of VA's "disparate-impact regulations." Sandoval, 532 U.S. at 281-82, 284-85 (noting that DOJ's regulations were in "considerable tension" with the Supreme Court's Title VI precedents); see also id. at 286 n.6 ("[Title VI] permits the very behavior that the regulations forbid."). Although Sandoval resolved only the question of private enforceability, subsequent cases such as Loper Bright have made clear that VA likewise cannot extend Title VI beyond its original public meaning. See 603 U.S. at 412-13 (holding that "courts must . . . ensur[e] that [an] agency acts within" its statutory authority).

Title VI authorizes agencies to promulgate regulations "to effectuate" the statute's prohibition of intentional discrimination. 42 U.S.C. 2000d-1. The current regulations' extension of prohibited conduct to include conduct with an unintentional disparate impact reaches a vastly broader scope than the statute itself. This scope is too broad to be considered a simple prophylactic measure aimed at preventing intentional discrimination. See Sandoval, 532 U.S. at 286 n.6 ("[Title VI] permits the very behavior that the regulations forbid."). Thus, the disparate-impact regulations do not "effectuate" Title VI. 42 U.S.C. 2000d-1.

There are also serious concerns about whether VA's Title VI regulations pass constitutional muster under the Equal Protection Clause. As the Supreme Court recently held in SFFA, "the Equal Protection Clause . . . applies without regard to any differences of race, of color, or of nationality-it is universal in its application" and the "guarantee of equal protection cannot mean one thing when applied to one individual and something else when applied to a person of another color." 600 U.S. at 206 (internal quotation marks omitted) (first quoting Yick Wo v. Hopkins, 118 U.S. 356, 369 (1886); and then quoting Bakke, 438 U.S. at 289-90 (Powell, J.)). Despite the promises of the Equal Protection Clause, a funding recipient's risk of disparate-impact liability under VA's regulations is triggered by unintentional disparate outcomes, which the recipient may not even know about without investigation. To evaluate and avoid this risk, the funding recipient must incur investigatory costs, such as conducting an impact analysis, and is coerced to proactively consider race, color, and national origin, and potentially use it to change the unintended disparate outcomes.

In short, disparate-impact liability encourages and, in some cases, requires covered entities to engage in the intentional use of race and racial balancing to eliminate those disparate outcomes by treating certain racial groups differently from others-the exact conduct the Equal Protection Clause forbids. See id. The serious constitutional concerns raised by these perverse incentives further confirm that the best reading of Title VI is that it prohibits only intentional discrimination and does not authorize VA to impose disparate-impact liability. See Edward J. DeBartolo Corp. v. Fla. Gulf Coast Bldg. & Constr. Trades Council, 485 U.S. 568, 575 (1988) ("[W]here an otherwise acceptable construction of a statute would raise serious constitutional problems, the Court will construe the statute to avoid such problems unless such construction is plainly contrary to the intent of Congress." (citing NLRB v. Catholic Bishop of Chi., 440 U.S. 490, 499-501, 504 (1979)).

This encouraged or required use of race, color, or national origin violates the Equal Protection Clause unless it survives review under the "daunting" strict-scrutiny standard. SFFA, 600 U.S. at 206; see also Free Speech Coal., Inc. v. Paxton, 145 S. Ct. 2291, 2310 (2025) ("Strict scrutiny-which requires a restriction to be the least restrictive means of achieving a compelling governmental interest-is `the most demanding test known to constitutional law.' " (quoting City of Boerne v. Flores, 521 U.S. 507, 534 (1997)). The use of race, color, or national origin necessitated by the disparate-impact provisions runs into serious issues with the requirement of narrow tailoring to achieve a compelling interest. SFFA, 600 U.S. at 206-07.

Similarly, the "affirmative action" provision authorizes and sometimes requires the intentional use of race without requiring that this intentional use be narrowly tailored to serve a recognized compelling interest. Instead, it encourages intentional racial balancing "to overcome the effects of" unintended racial disparities. 38 CFR 18.3(b)(6). Thus, for substantially the same reasons as above, the "affirmative action" provision raises serious constitutional concerns.

As summarized above, there are serious statutory and constitutional concerns with VA's disparate-impact regulations. But even if the regulations were legal, VA finds that eliminating the potential constitutional concerns addressed above would independently justify proposed amendment of the regulations. Cf. U.S. Tel. Ass'n v. FCC, 188 F.3d 521, 528 (D.C. Cir. 1999) (concluding it was not "arbitrary and capricious" to adopt a certain policy in order to "avoid[ ] raising a non-trivial constitutional question"). And even if the regulations did not raise serious constitutional concerns, VA finds that eliminating the costs and confusion caused by the mismatch between the statute and the disparate-impact regulations would independently justify proposed repeal of the regulations.

2. Serious Policy Concerns

VA also has serious policy concerns with the imposition of disparate-impact liability. While VA expresses its policy concerns with disparate-impact liability independent of E.O. 14281, that E.O. sets forth many valid policy concerns with disparate-impact liability. As noted in section 1 of the E.O., "On a practical level, disparate-impact liability has hindered businesses from making hiring and other employment decisions based on merit and skill, their needs, or the needs of their customers because of the specter that such a process might lead to disparate outcomes, and thus disparate-impact lawsuits. This has made it difficult, and in some cases impossible, for employers to use bona fide job-oriented evaluations when recruiting, which prevents job seekers from being paired with jobs to which their skills are most suited-in other words, it deprives them of opportunities for success." 90 FR at 17537. Moreover, the legal concerns identified above have caused uncertainty and confusion for Federal-funding recipients as to whether and when they need to comply with the disparate-impact regulations and when they can or must consider race, color, and national origin. As explained above, Sandoval casts substantial doubt on the validity of the disparate-impact regulations that many Federal departments and agencies have promulgated pursuant to Title VI. 532 U.S. at 280-82.

Additionally, in practice, and as explained above, disparate-impact liability leads covered entities to engage in racial balancing even as Title VI forbids intentional racial discrimination. This tension tends to create confusion and undermine public confidence in the nation's civil rights laws and in the rule of law itself, as the law seems to both forbid and require the same conduct.

These problems are amplified by the arbitrary nature of the racial and ethnic categories typically used to measure disparate effects, which, by virtue of their arbitrariness, typically lack a meaningful connection to a compelling interest. See, e.g., SFFA, 600 U.S. at 216-17 (explaining that the "[racial] categories" utilized by Harvard and University of North Carolina were "themselves imprecise in many ways" and "the use of these opaque racial categories undermine[d], instead of promote[d], [their] goals"). This confusion undermines the law's ability to teach principles of nondiscrimination. VA believes that these policy concerns would independently justify repealing certain parts of its regulation to cure this confusion, remove the incentive for covered entities to engage in racial balancing, and maintain clarity and public confidence in the nation's civil rights laws. Overall, regardless of the legality of VA's disparate-impact regulations, VA believes that the above summarized policy concerns, when viewed separately or cumulatively, would independently justify the repeal of its disparate-impact regulations.

On December 10, 2025, DOJ issued a final rule amending its Title VI regulations to eliminate disparate-impact liability. 90 FR 57141. DOJ made these amendments to align its regulations with Title VI's original public meaning, avoid constitutional concerns, reduce compliance costs, and serve the public interest. Id. VA agrees with DOJ's rationale and interpretation of Title VI in its final rule, as discussed above. Thus, VA finds it necessary to propose revising its Title VI regulations in part 18 to remove the disparate-impact provisions.

II. Substantive Changes to 38 CFR Part 18

Currently, 38 CFR 18.3 contains several provisions that prohibit conduct or activities causing an unintentional disparate impact and, in some instances, encourage or even require unlawful discrimination labeled as "affirmative action," without a statutory or constitutional basis for doing so. For the reasons discussed above, VA is proposing to amend several paragraphs in 38 CFR 18.3 and a related appendix to remove the disparate-impact liability and affirmative-action language.

A. Table Summarizing Proposed Amendments

The table below indicates the exact wording changes. For each section indicated in the left column, the text shown in the middle column is proposed to be removed, and the text shown in the right column is proposed to be added:

B. Section-by-Section Analysis

1. 38 CFR 18.3(b)(2)

Current paragraph (b)(2) states that a recipient, in determining the types of services, financial aid, or other benefits, or facilities which will be provided under any such program, or the class of individuals to whom, or the situations in which, such services, financial aid, other benefits, or facilities will be provided under any such program, or the class of individuals to be afforded an opportunity to participate in any such program, may not, directly or through contractual or other arrangements, utilize criteria or methods of administration which have the effect of subjecting individuals to discrimination because of their race, color, or national origin, or have the effect of defeating or substantially impairing accomplishment of the objectives of the program with respect to individuals of a particular race, color, or national origin.

Because this language's only apparent purpose is to prohibit disparate-impact discrimination, VA proposes to remove paragraph (b)(2) in its entirety. VA would thus amend the regulations to conform to Title VI and to address the legal and policy considerations and determinations described in this document. VA would reserve this paragraph to maintain the numbering accuracy of previous citations and other references to paragraphs of this section.

2. 38 CFR 18.3(b)(3)

Current paragraph (b)(3) states that in determining the site or location of facilities, a recipient or applicant may not make selections with the purpose or effect of excluding individuals from, denying them the benefits of, or subjecting them to discrimination under any program to which this part applies on the grounds of race, color, or national origin; or with the purpose or effect of defeating or substantially impairing the accomplishment of the objectives of the Act or this part.

Because this language includes references to "effect," which extends the scope of the regulations to conduct having an unintentional disparate impact, VA proposes to remove "or effect," which is used twice in paragraph (b)(3). Thus, this paragraph would be revised to read as follows: In determining the site or location of facilities, a recipient or applicant may not make selections with the purpose of excluding individuals from, denying them the benefits of, or subjecting them to discrimination under any program to which this part applies on the grounds of race, color, or national origin; or with the purpose of defeating or substantially impairing the accomplishment of the objectives of the Act or this part.

3. 38 CFR 18.3(b)(6)

Paragraph (b)(6) concerns the use of "affirmative action," and states that (i) in administering a program regarding which the recipient has previously discriminated against persons on the ground of race, color, or national origin, the recipient must take affirmative action to overcome the effects of prior discrimination; and (ii) even in the absence of such prior discrimination, a recipient in administering a program may take affirmative action to overcome the effects of conditions which resulted in limiting participation by persons of a particular race, color, or national origin.

Paragraph (b)(6)(ii) authorizes affirmative action even in the absence of a finding of prior discrimination in a program "to overcome the effects of conditions which resulted in limiting participation by persons of a particular race, color, or national origin." This provision points not to intentional discrimination, but rather to the unintentional "effects of conditions." It consequently encourages intentional racial classifications, racial preferences, and other race-based actions without specifying the compelling governmental interest and narrow tailoring that the Equal Protection Clause demands. This section has long been unlawful under the Equal Protection Clause.

Paragraph (b)(6)(i) requires that a recipient "must take affirmative action to overcome the effects of prior discrimination" if, in "administering a program," the funding "recipient has previously discriminated against persons on the ground of race, color, or national origin." This provision goes beyond the Equal Protection Clause, which permits in limited circumstances, but does not mandate, a government actor to take narrowly tailored action to remedy the effects of its identified past discrimination. See, e.g., Bakke, 438 U.S. at 307 (Powell, J.). Moreover, even putting aside the mandatory language, this provision does not expressly require narrow tailoring to counter the particular past discrimination, but rather simply "affirmative action to overcome the effects of prior discrimination." This provision accordingly promotes potentially illegal race, color, and national origin discrimination. Moreover, in some instances, it may even coerce recipients to consider and use race preferences when the recipient does not want to. This is contrary to VA's goal of promoting and defending a culture of nondiscrimination and is destructive to the public's understanding of and faith in the nation's civil rights laws. This rule, therefore, proposes to remove paragraph (b)(6).

4. 38 CFR 18.3(d)(2)

Current paragraph (d)(2) states that in regard to Federal financial assistance that does not have providing employment as a primary objective, the provisions of paragraph (d)(1) of this section apply to the employment practices of the recipient if discrimination on the ground of race, color, or national origin in such employment practices tends, on the grounds of race, color, or national origin, to exclude persons from participation in, to deny them the benefits of or to subject them to discrimination under the program receiving Federal financial assistance. In any such case, the provisions of paragraph (d)(1) of this section shall apply to the extent necessary to assure equality of opportunity to and nondiscriminatory treatment of beneficiaries.

Because this paragraph extends its prohibition of discriminatory employment practices to conduct that "tends" to have a discriminatory effect and conflicts with 42 U.S.C. 2000d-3, which states "[n]othing contained in [Title VI] shall be construed to authorize action under [Title VI] by any department or agency with respect to any employment practice of any employer, employment agency, or labor organization except where a primary objective of the Federal financial assistance is to provide employment," VA proposes removing paragraph (d)(2) in its entirety. VA would move the language from current paragraph (d)(1) to paragraph (d) with one change and would remove paragraphs (d)(1) and (2).

On September 28, 1965, E.O. 11246, Equal Employment Opportunity, was published. It established, in part, that the policy of the U.S. Government was to provide equal opportunity in Federal employment for all qualified persons and to prohibit discrimination in employment because of race, creed, color, or national origin. On January 31, 2025, E.O. 14173 was published, which rescinded E.O. 11246. See 90 FR 8633. Thus, VA proposes to delete the last sentence of current paragraph (d)(1) as it references E.O. 11246.

As proposed, paragraph (d) would read: Employment practices. Whenever a primary objective of the Federal financial assistance to a program to which part 18 applies, is to provide employment, a recipient of such assistance may not (directly or through contractual or other arrangements) subject any individual to discrimination on the ground of race, color, or national origin in its employment practices under such program (including recruitment or recruitment advertising, employment, layoff, or termination, upgrading, demotion, or transfer, rates of pay or other forms of compensation, and use of facilities).

5. 38 CFR Part 18, Subpart A, Appendix B

Appendix B to part 18, subpart A includes illustrative applications of the nondiscrimination provisions to certain VA grants. Paragraph (d) provides the following example: A recipient may not take action that is calculated to bring about indirectly what this part forbids it to accomplish directly. Thus, a State, in selecting or approving projects or sites for the construction of a nursing home which will receive Federal financial assistance, may not base its selections or approvals on criteria which have the effect of defeating or of substantially impairing accomplishment of the objectives of the Federal assistance program with respect to individuals of a particular race, color, or national origin.

Because this language includes references to "effect," which may extend the scope of Title VI to unintentional disparate impacts, VA proposes removing paragraph (d) in its entirety.

III. Technical Changes to 38 CFR Part 18

A. 38 CFR 18.3(b)(1)(v)

Current 18.3(b)(1)(v) explains that a recipient to which part 18 applies may not, directly or through contractual or other arrangements, on grounds of race, color, or national origin treat an individual differently from others in determining whether is satisfied any admission, enrollment, quota, eligibility, membership, or other requirement or condition which individuals must meet in order to be provided any service, financial aid, or other benefit provided under the program.

For purposes of clarity and ease for the reader, VA proposes to revise this provision to move "is satisfied" to the end of the sentence. Thus, as proposed, paragraph (b)(1)(v) would read as follows: a recipient to which part 18 applies may not, directly or through contractual or other arrangements, on grounds of race, color, or national origin treat an individual differently from others in determining whether any admission, enrollment, quota, eligibility, membership, or other requirement or condition which individuals must meet in order to be provided any service, financial aid, or other benefit provided under the program is satisfied.

This is a non-substantive change. VA would make no other changes to this paragraph.

B. 38 CFR 18.12

Section 18.12 addresses the effect on other regulations, forms, and instructions. Paragraph (a)(1) explains, in pertinent part, that nothing in part 18 shall be deemed to supersede E.O.s 10925 (3 CFR, 1959-1963 Comp., p. 448), 11114 (3 CFR, 1959-1963, p. 774), and 11246 (3 CFR, 1965 Supp., p. 167).

As previously discussed, on January 31, 2025, E.O. 14173 was published, which rescinded E.O. 11246. See 90 FR 8633. Thus, VA proposes to remove reference to E.O. 11246 in 38 CFR 18.12(a)(1). As proposed, paragraph (a)(1) would read as follows: Executive Orders 10925 (3 CFR, 1959-1963 Comp., p. 448), 11114 (3 CFR, 1959-1963, p. 774), and regulations issued thereunder.

C. Appendix A to Subpart A of Part 18

Appendix A identifies the various statutory provisions to which subpart A applies. VA acknowledges that this list is outdated, as various programs are subject to subpart

A. However, VA will add additional programs in a future rulemaking.

As part of this rulemaking, VA merely proposes to update the currently referenced statutory provisions to reflect the correct provisions. Thus, VA specifically proposes to update the following statutory provisions: Payments to State homes (38 U.S.C. 1741-1745); State home facilities for furnishing domiciliary, nursing home, and hospital care (38 U.S.C. 8131-8138); All-volunteer force educational assistance, Veteran Readiness and Employment, post-Vietnam era veterans' educational assistance, veteran's educational assistance, survivors' and dependents' educational assistance, and administration of educational benefits (38 U.S.C. Chapters 30, 31, 32, 34, 35 and 36, respectively); Sharing of medical facilities, equipment, and information (38 U.S.C. 8151-8159); Space and office facilities for representatives of State employment services (38 U.S.C. 6306(e)); Medical care for survivors and dependents of certain veterans (38 U.S.C. 1781); Aid to States, counties, and tribal organizations for establishment, expansion, and improvement of veterans cemeteries (38 U.S.C. 2408); Assistance in establishing new state medical schools; grants to affiliated medical schools; assistance to health manpower training institutions (38 U.S.C. Chapter 82); and Department of Veterans Affairs health professional scholarship program (38 U.S.C. 7611-7619).

IV. Severability

VA's position is that each of the proposed amendments, if finalized, would serve a vital, related, but distinct purpose. VA also confirms that each of the proposed amendments, if finalized, would be intended to operate independently of each other and that the potential invalidity of one amendment should not affect the other amendments. VA would adopt any of the proposed amendments independently of the invalidity of a separate proposed amendment.

Executive Orders 12866 and 13563

VA examined the impact of this proposed rulemaking as required by EOs 12866 (Sept. 30, 1993) and 13563 (Jan. 18, 2011), which direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. The Office of Information and Regulatory Affairs has determined that this proposed rulemaking would be a significant regulatory action under section 3(f) of E.O. 12866, but would not be an "economically significant" action under section 3(f)(1). This proposed rule would be a deregulatory action under E.O. 14192.

This proposed regulation has been drafted and reviewed in accordance with E.O. 12866 section 1(b), id. at 51735, and in accordance with E.O. 13563 section 1(b), 76 FR 3821, 3821 (Jan. 21, 2011), which supplements and reaffirms the principles of E.O. 12866. These EOs direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. 58 FR at 51735; 76 FR at 3821. E.O. 13563 also recognizes that some benefits and costs are difficult to quantify and provides that, where appropriate and permitted by law, agencies may consider and discuss qualitatively values that are difficult or impossible to quantify. Id.

Economic Impact: As explained in the preamble, the regulatory modifications this rule proposes to make are necessary to conform VA regulations to E.O. 14281, address serious concerns regarding VA's Title VI regulation that the Supreme Court raised in Sandoval, harmonize the implementing regulation's scope with Title VI, promote consistency in enforcement among private plaintiffs and Federal departments and agencies, and provide much needed clarity to courts and Federal-funding recipients and beneficiaries regarding the scope of VA's Title VI regulations. Indeed, with respect to 38 CFR 18.3(d), the changes this rule proposes to make are clearly necessary to bring the regulations into compliance with 42 U.S.C. 2000d-3. In short, this proposed rule is necessary to conform VA's regulation to existing statutory law, as interpreted by the Supreme Court.

Data limitations make the costs and benefits of the proposed rule difficult to quantify. In FY25, eight VA discretionary grant programs supported 621 awards, totaling $1,055,770,349. However, due to the data limitations, VA is unable to provide specifics regarding any active investigations and compliance reviews regarding these funds. Additionally, VA does not comprehensively track its investigations and compliance reviews involving solely allegations of disparate-impact discrimination. For enforcement actions that relate to both intentional discrimination and conduct having an unintentional disparate impact, VA does not track and cannot reliably quantify the costs attributable to the disparate-impact portions of enforcement actions. That the existence of a disparate impact is sometimes a factor that may be considered in determining whether discrimination is intentional further impedes monetizing costs and benefits. Therefore, the overall cost effect on VA is difficult to quantify. The deregulatory action should decrease VA's enforcement costs, however. It should have the benefit, also difficult to quantify, of bringing VA's conduct in line with the law. Similarly, VA is unable to quantify how funding recipients will respond to the regulatory changes. But the deregulatory action should result in greater flexibility and lower compliance costs for recipients.

VA recognizes that a funding recipient may receive Federal funds from other sources. This deregulatory action would not create any new obligations for funding recipients. On the contrary, by eliminating disparate-impact liability from the regulation, it would eliminate a source of regulatory confusion, narrow the conduct prohibited, and thus lessen the costs of compliance and potential liability. Moreover, recipients who receive funds for the same program or activity from more than one Federal entity already enter into separate contractual assurances with each funding entity. See, e.g., 38 CFR 18.4. These contractual assurances already impose varying requirements that each Federal-funding source deems necessary. Funding recipients would continue to be held to the most stringent contractual assurance and regulation.

Based on the analysis of the practical qualitative costs and benefits noted above, VA believes that this proposed rule would be consistent with the principles of EOs 12866 and 13563, including the requirements that, to the extent permitted by law, VA adopt a regulation only upon a reasoned determination that its benefits justify its costs and choose a regulatory approach that maximizes net benefits. See 58 FR at 51735; 76 FR at 3821.

Executive Order 14192 (Unleashing Prosperity Through Deregulation)

E.O. 14192 requires an agency, unless prohibited by law, to identify at least 10 existing regulations to be repealed when the agency publicly proposes for notice and comment or otherwise promulgates a new regulation. 90 FR 9065, 9065 (Jan. 31, 2025). In furtherance of this requirement, section 3(c) of the E.O. requires that "any new incremental costs associated with new regulations shall, to the extent permitted by law, be offset by the elimination of existing costs associated with at least 10 prior regulations." Id. This proposed rule would eliminate unnecessary regulation by revising VA's current Title VI regulations, which extend prohibited conduct to include conducting having an unintentional disparate impact and thus expand the scope of those regulations to a vastly broader range of conduct than the statute prohibits. Accordingly, VA expects this proposed rule to be a deregulatory action under E.O. 14192.

Executive Order 12250

Pursuant to section 1-202 of E.O. 12250, DOJ has the responsibility to "review . . . proposed rules . . . of the Executive agencies" implementing nondiscrimination statutes such as Title VI in order to identify those which are inadequate, unclear, or unnecessarily inconsistent. Additionally, section 1-101 of E.O. 12250 delegated the President's responsibility to approve Title VI regulations to the Attorney General. See 42 U.S.C. 2000d-1. DOJ has reviewed and approved this proposed rule.

Regulatory Flexibility Act

The Secretary hereby certifies that this proposed rule would not have a significant economic impact on a substantial number of small entities as defined in the Regulatory Flexibility Act (5 U.S.C. 601-612). This certification is based on the fact that this proposed rule's changes would not have a significant economic impact on a substantial number of small entities, in large part because these regulatory changes would not impose any new substantive obligations on Federal-funding recipients. The rule would amend and clarify existing regulations that are required by Title VI. The rule would merely bring VA into compliance with the Equal Protection Clause and harmonize the scope of its regulations to conform with the scope of Title VI, which does not prohibit unintentional disparate impact. All Federal-funding recipients have been bound by the existing standards that would remain in place after this rule since their initial promulgation.

Unfunded Mandates

This proposed rule would not result in the expenditure by State, local, and Tribal governments, in the aggregate, or by the private sector, of $100 million or more (adjusted annually for inflation) in any one year.

Paperwork Reduction Act

This proposed rule contains no provisions constituting a collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521).

Signing Authority

Douglas A. Collins, Secretary of Veterans Affairs, approved this document on June 22, 2026, and authorized the undersigned to sign and submit the document to the Office of the Federal Register for publication electronically as an official document of the Department of Veterans Affairs.

For the reasons stated in the preamble, the Department of Veterans Affairs proposes to amend 38 CFR part 18 as set forth below:

PART 18-NONDISCRIMINATION IN FEDERALLY-ASSISTED PROGRAMS OF THE DEPARTMENT OF VETERANS AFFAIRS-EFFECTUATION OF TITLE VI OF THE CIVIL RIGHTS ACT OF 1964

Subpart A-General

The revisions read as follows:

* * * * *

(b) * * *

(1) * * *

(v) Treat an individual differently from others in determining whether any admission, enrollment, quota, eligibility, membership, or other requirement or condition which individuals must meet in order to be provided any service, financial aid, or other benefit provided under the program is satisfied.

* * * * *

(2) [Reserved]

(3) In determining the site or location of facilities, a recipient or applicant may not make selections with the purpose of excluding individuals from, denying them the benefits of, or subjecting them to discrimination under any program to which this part applies on the grounds of race, color, or national origin; or with the purpose of defeating or substantially impairing the accomplishment of the objectives of the Act or this part.

* * * * *

(d) Employment practices. Whenever a primary objective of the Federal financial assistance to a program to which part 18 applies, is to provide employment, a recipient of such assistance may not (directly or through contractual or other arrangements) subject any individual to discrimination on the ground of race, color, or national origin in its employment practices under such program (including recruitment or recruitment advertising, employment, layoff, or termination, upgrading, demotion, or transfer, rates of pay or other forms of compensation, and use of facilities).

(a) * * *

(1) Executive Orders 10925 (3 CFR, 1959-1963 Comp., p. 448), 11114 (3 CFR,

1959-1963, p. 774), and regulations issued thereunder, or

* * * * *

Appendix A to Subpart A of Part 18-Statutory Provisions to Which This Subpart Applies

1. Payments to State homes (38 U.S.C. 1741-1745).

2. State home facilities for furnishing domiciliary, nursing home, and hospital care (38 U.S.C. 8131-8138).

3. Space and office facilities for representatives of recognized national organizations (38 U.S.C. 5902(a)(2)).

4. All-volunteer force educational assistance, Veteran Readiness and Employment, post-Vietnam era veterans' educational assistance, veteran's educational assistance, survivors' and dependents' educational assistance, and administration of educational benefits (38 U.S.C. Chapters 30, 31, 32, 34, 35 and 36, respectively).

5. Sharing of medical facilities, equipment, and information (38 U.S.C. 8151-8159).

6. Approval of educational institutions (38 U.S.C. 104).

7. Space and office facilities for representatives of State employment services (38 U.S.C. 6306(e)).

8. Medical care for survivors and dependents of certain veterans (38 U.S.C.1781).

9. Transfers for nursing home care; adult day health care (38 U.S.C. 1720).

10. Treatment and rehabilitation for alcohol or drug dependence or abuse disabilities (38 U.S.C. 1720A).

11. Aid to States, counties, and tribal organizations for establishment, expansion, and improvement of veterans cemeteries (38 U.S.C. 2408).

12. Assistance in establishing new state medical schools; grants to affiliated medical schools; assistance to health manpower training institutions (38 U.S.C. Chapter 82).

13. Department of Veterans Affairs health professional scholarship program (38 U.S.C. 7611-7619).

14. Emergency veterans job training (Pub. L. 98-77, 97 Stat. 443-452).

Appendix B to Subpart A of Part 18 [Amended]

5. Amend Appendix B to Subpart A of Part 18 by removing paragraph (d).

[FR Doc. 2026-12924 Filed 6-25-26; 8:45 am]

BILLING CODE 8320-01-P

⁽¹⁾  Pursuant to 38 U.S.C. 501(d), the exception to notice and comment rulemaking in 5 U.S.C. 553(a)(2) does not apply to matters relating to loans, grants, or benefits under a law administered by the Secretary of VA. As such, VA has published this proposed rule to provide the public notice and the opportunity to comment on these changes.