SBA Strips Disparate Impact and Affirmative Action Rules From Part 112
SBA removed disparate impact liability and race-conscious affirmative action provisions from 13 CFR Part 112 without notice and comment, but said the same outcome statistics can now help prove intentional discrimination.
On September 29, 2026, the Small Business Administration amended 13 CFR Part 112, its Title VI implementing regulation, deleting disparate impact liability and the affirmative action provisions at Sections 112.3(b)(3) and 112.7(d), effective immediately and without notice and comment under the APA's 5 U.S.C. § 553(a)(2) exception. SBA relied on DOJ's review and the same reasoning DOJ, Interior, Transportation, Agriculture and Labor used over the preceding ten months, citing Alexander v. Sandoval, Loper Bright, Students for Fair Admissions and Executive Order 14281, and called the removed provisions encouragement of "the exact conduct the Equal Protection Clause forbids." The affirmative action rescission is a layer the other agencies' rules did not need to reach.
The practical exposure is narrow: recipients of SBA financial assistance, not SBA contracting programs, and SBA itself conceded the provisions were already "effectively inoperative." The durable point is evidentiary. SBA, like the five prior agencies, said removing disparate impact liability does not preclude using outcome statistics to prove intent — now the theory the EEOC prioritizes. Demographic and selection data remains collectible and discoverable, so privileged adverse impact analysis remains worthwhile. Title VII and state and local disparate impact statutes are untouched. Watch for challenges to the notice-and-comment-free amendment, further agency rescissions, and EEOC enforcement guidance.