SBA Rescinded Disparate Impact and Affirmative Action Rules
The Small Business Administration removed race-conscious provisions from its Title VI regulations.
Updated on Oct. 2, 2026 in Law
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The Small Business Administration has amended its regulations to remove disparate impact and affirmative action provisions. The agency implemented the changes to 13 CFR Part 112 without prior notice or public comment.
Why it matters
The agency cited Supreme Court precedents and the Civil Rights Act to argue that Title VI prohibits only intentional discrimination. The SBA maintains that its previous affirmative action rules encouraged conduct forbidden by the Equal Protection Clause.
The rule change amends 13 CFR Part 112 by striking race-conscious affirmative action provisions and disparate impact language. Statistical disparity remains admissible as evidence to prove intentional discrimination.
The players
Small Business Administration
This federal agency is responsible for providing support to entrepreneurs and small businesses through loans, disaster assistance, and government contracting programs.
The details
The Small Business Administration utilized an Administrative Procedure Act exception at 5 U.S.C. § 553(a)(2) to bypass notice and comment periods. The move, which cites Executive Order 14281, does not alter the underlying eligibility requirements for existing SBA contracting programs.
Timeline
The new regulatory rule took effect on September 29, 2026.
Political Context
The agency claims these amendments align federal operations with the Students for Fair Admissions precedent. Critics contend that removing disparate impact tools undermines protections against systemic discrimination in government-funded programs.
Small business owners and government contractors should note that the core eligibility requirements for SBA programs remain unchanged. However, the update alters the internal regulatory framework used by the agency to address discrimination claims.
The takeaway
The SBA move reflects a significant shift in how federal agencies interpret Title VI requirements in the wake of recent Supreme Court rulings. Compliance officers and business entities should review updated agency guidance to understand the new evidentiary standards for discrimination.
Further reading
Learn more about evolving federal standards at the Law section.
Source note: This article includes information reported by The National Law Review - A Free To Use Nationwide Database of Legal Publications.
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