VA Proposes to End Disparate-Impact Liability Under Title VI: What Recipients of VA Federal Financial Assistance Should Know
Article by: Rory Hatch, Associate
Title VI of the Civil Rights Act of 1964 (“Title VI”) bans discrimination in federally funded programs. But how far does that ban go? Does it cover only deliberate discrimination, or the unintended effects of neutral policies as well? The Department of Veterans Affairs has a new proposed rule that takes a clear position.
On June 26, 2026, the Department of Veterans Affairs (“VA”) published a proposed rule that would amend its regulations implementing Title VI to eliminate disparate-impact liability. The proposed rule would rescind the portions of 38 CFR Part 18 that reach conduct producing an unintentional disparate impact, leaving in place only the prohibition on intentional discrimination. Comments on the proposed rule are due July 27, 2026.
This proposed rule impacts recipients of federal financial assistance, meaning grants and similar funding, rather than federal procurement contracts. If your organization receives VA funding, whether as a state veterans home, a state or tribal veterans cemetery program, a medical or nursing school, a health professional training institution, an educational institution approved for VA education benefits, or another VA grantee, this proposed rule speaks to the nondiscrimination rules that attach to that funding. One scoping point that matters below: 38 CFR Part 18 is broader than Title VI alone, and this proposed rule reaches only its Title VI subpart.
Background: Two Kinds of Discrimination
Title VI provides that no person shall, on the ground of race, color, or national origin, be excluded from participation in, denied the benefits of, or subjected to discrimination under any program or activity receiving federal financial assistance. 42 U.S.C. 2000d. The statute speaks in a single sentence, but VA’s implementing regulations, like those of most federal agencies, have long addressed two very different kinds of conduct.
- The first is intentional discrimination: treating people differently because of race, color, or national origin. The proposed rule will leave this category in place.
- The second is disparate impact: a facially neutral policy that, whatever its purpose, produces an uneven outcome along those lines. The proposed rule affects only this category.
The Proposed Rule at a Glance: Removed vs. Retained
The impact of the rule change is easiest to see in the below chart. The left column details the portions of the rule the VA proposes to remove. The right column details those portions of the rule that will remain unchanged. The through-line: VA is stripping out liability for unintended effects while leaving every intent-based protection in place.
|
What VA Would Cut |
What Would Still Stand |
| • The main disparate-impact ban. § 18.3(b)(2), which bars policies that end up discriminating by race, color, or national origin even when no one meant them to.
• Facility siting by effect. The “or effect” language in § 18.3(b)(3), leaving only site choices made for a discriminatory reason. • The affirmative-action language. § 18.3(b)(6), which in places tells or lets recipients take affirmative action to fix the effects of past discrimination. • The employment “tends to” rule. § 18.3(d)(2), which reached hiring practices that merely “tend” to have a discriminatory effect. • An outdated example. A nursing-home siting example in Appendix B. • Housekeeping. A wording fix to § 18.3(b)(1)(v), removal of the rescinded Executive Order 11246, and a refreshed program list in Appendix A. |
• The ban on intentional discrimination. Treating people differently because of race, color, or national origin stays fully prohibited.
• Employment protections where jobs are the point. Intentional discrimination in hiring stays covered when providing employment is a primary objective of the VA funding. • The same footing for purposeful conduct. A recipient of VA funding that means to discriminate is in exactly the position it is in today. • The disability and age rules. The rule amends only Subpart A. Subpart D (disability, Section 504) and Subpart E (age, Age Discrimination Act) keep their effects-based provisions in full. |
Narrower, But Not a Free Pass
If finalized, the rule would substantially narrow potential liability under Title VI by limiting VA enforcement to claims of intentional discrimination rather than challenging facially neutral policies that incidentally produce disparate outcomes; intentional discrimination would remain prohibited, and evidence of uneven outcomes could still support an inference of discriminatory intent, but the overall theory of liability would be more constrained even as the underlying obligation to act fairly endures.
A few things stay on your radar:
Watch your affirmative-action programs. If your organization has leaned on § 18.3(b)(6) to justify race-conscious or remedial efforts, note that this provision is going away. Once it is gone, the regulation no longer backs affirmative action to address past discrimination or uneven participation. Review those programs with counsel, both against the new rule and against the broader equal-protection concerns.
Do not assume disability and age moved too. Part 18 is wider than Title VI: Subpart D covers disability under Section 504, and Subpart E covers age under the Age Discrimination Act. This rule amends only the Title VI subpart, so the effects-based standards survive there in full, including the employment criteria at § 18.413 that reach practices which “tend to screen out” people with disabilities, and the affirmative-action provisions at § 18.406 and § 18.516. The same facts could still support a disability or age claim after a Title VI theory is gone.
Mind your other funders. This rule touches only VA’s own Title VI regulations. If you take money from more than one federal agency, you are still bound by the strictest rule that applies to you, so do not assume one uniform standard across all your funding.
Do not overlook state and local law. Those rules may keep disparate-impact standards in place no matter what VA does, so your day-to-day compliance may not shift as much as the federal text suggests.
Keep your paper trail. Because this is being done by rulemaking, a court could strike it down or a future administration could reverse it. Documenting why you make today’s compliance choices will pay off if the ground shifts later.
What Recipients Can Do Now
- Confirm your exposure. Determine whether and how your organization receives VA federal financial assistance, and identify the programs and assurances that come with it.
- Inventory race-conscious measures. Identify any policies, programs, or practices that rely on the affirmative-action language in § 18.3(b)(6) or that are built around disparate-impact analysis, and flag them for review.
- Map your other funding sources. List your other federal funders and the nondiscrimination assurances attached to each, so you understand which standards continue to apply after this rule.
- Check state and local obligations. Confirm whether any state or local nondiscrimination requirements impose disparate-impact standards on your programs independent of Title VI.
- Consider commenting. Comments may be submitted through the Federal Register. Recipients who would be affected by the removal of the affirmative-action provisions, or who have practical concerns about how the change interacts with other funding obligations or with state law, may wish to make those points part of the record while the rule is still in proposed form.
- Document your analysis. Keep a record of the compliance decisions you make in response to this rule and the reasons for them.
A Narrower Rule, Not a Clean Slate
For VA funding recipients, the headline is welcome: less exposure to liability and a less taxing compliance burden under VA’s rules. A few things do not, however, change. Intentional discrimination is still barred, your other federal and state obligations may stay exactly as they are, and the affirmative-action authority some recipients have relied on would disappear. Read this as a prompt to take stock of your nondiscrimination practices, independent of with which agency you are working, and you will be well positioned when the rule is finalized.
For organizations with questions about how this proposed rule affects their VA funding, their nondiscrimination obligations, or their existing programs, the attorneys at Ward & Bradel are available to help.