Rescission of Executive Order 11246 Implementing Regulations

Federal RegisterAug 21, 2026

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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.

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:

ofccp_guidance@dol.gov.

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

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.

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.

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.

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.

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.

In 1965, the Department created the Office of Federal Contract Compliance to discharge responsibilities assigned to the Secretary of Labor under E.O. 11246.

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.

See

E.O. 11246 Sec. 209.

Id.

Dep't of Labor Secretary's Order No. 26-65, Office of Federal Contract Compliance (EEO), Establishment (Oct. 5, 1965).

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.

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

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.

See

33 FR 7804, 7811 (May 28, 1968) (establishing an AAP dollar threshold of a single contract of $50,000);

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”).

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.

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.

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).

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.

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).

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.

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).

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.

“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).

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.

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.

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.

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

Based Opportunity,”

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.

On April 1, 2025, President Trump issued a memorandum directing agencies to repeal regulations that conflict with recent Supreme Court precedents, including

West Virginia

EPA,

597 U.S. 697 (2022) and

Students for Fair Admissions

President & Fellows of Harvard Coll.,

600 U.S. 181 (2023) (

SFFA

90 FR 8633 (Jan. 31, 2025).

Id.

at 8634.

Presidential Memorandum, Directing the Repeal of Unlawful Regulations (Apr. 1, 2025).

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).

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.

If the VEVRAA and Section 503 rulemakings take effect, the Department will then rescind the 41 CFR part 60-30 regulations in their entirety.

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.

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.

Rescission of Executive Order 11246 Implementing Regulations; Extension of Comment Period, 90 FR 42711 (Sept. 4, 2025).

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

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,

promoting jobs for women in construction

and, as E.O. 11246 was amended in 2016, for protecting workers from adverse action for discussing pay, thereby helping to uncover pay disparities.

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].”

E.g.,

Comment of nine members of the House of Representatives.

Comment of Chicago Women in Trades.

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-

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

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, e.g., McGarry

Bd. of Cnty. Comm'rs,

175 F.3d 1193, 1199 (10th Cir. 1999);

Bass

Bd. of Cnty. Comm'rs,

256 F.3d 1095, 1110 (11th Cir. 2001);

Humphries

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.

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

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

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.”

OFCCP's early regulations did not identify any specific statutory source of authority. In 1979, the Supreme Court recognized in

Chrysler Corp.

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).

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.

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).

As NCLA noted, the Department did not identify a specific statutory source of authority for any regulation implementing E.O. 11246 for many decades.

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).

The Department's

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

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”).

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.

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.

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.

Louisiana

Biden,

55 F.4th 1017, 1026 (5th Cir. 2022) (quoting

AFL-CIO

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

Biden,

57 F.4th 545, 551-52 (6th Cir. 2023);

Nebraska

Su,

121 F.4th 1, 8 (9th Cir. 2024).

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.

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.

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.

Biden

Nebraska,

600 U.S. 477, 504 (2023);

West Virginia

EPA,

597 U.S. 697, 732 (2022);

NFIB

DOL,

595 U.S. 109, 117 (2022);

Alabama Ass'n of Realtors

HHS,

594 U.S. 758, 764 (2021).

Id.

See, e.g., Louisiana

Biden,

55 F.4th at 1029;

Kentucky

Biden,

23 F.4th 585, 606 (6th Cir. 2022);

Georgia

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

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

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

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.

The Procurement Act may authorize

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.

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

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.

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.

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.

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.

See, e.g., Commodity Futures Trading Comm'n

Schor,

478 U.S. 833, 851-57 (1986).

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.

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.

Relying on recent case law, these other commenters asserted that OFCCP's practice of adjudicating investigations through proceedings before Administrative Law

Judges may not survive constitutional scrutiny.

See e.g,. SEC

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

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.

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

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

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

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

Su.,

121 F.4th 1, 10 (9th Cir. 2024);

Louisiana

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

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

SEC,

125 F.4th 159, 184 (2024) (internal quotation marks and alterations omitted) (quoting

Biden

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.

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

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

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

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.

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

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

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

EPA,

507 F.3d 706, 715 (D.C. Cir. 2007) (quoting

Home Box Office, Inc.

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

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,

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.

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.”

See

41 CFR 60-4.3.

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

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.

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.

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.

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

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

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.

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.

DOL's scheduling methodologies are available at

https://www.dol.gov/agencies/ofccp/scheduling/Methodologies.

(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, a

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