• The Occupational Safety and Health Administration said it is pulling the vaccine and testing rules for businesses effective Wednesday.
• The Supreme Court's conservative majority blocked the rules earlier this month, saying OSHA had exceeded the authority given to the agency by Congress.
• Biden has called on businesses to voluntarily implement the requirements.

The Biden administration is formally withdrawing its vaccine and testing mandate for businesses, after the Supreme Court blocked the requirements earlier this month.

The Occupational Safety and Health Administration will pull the rule for businesses effective Wednesday, Jan. 26, the agency said in a statement posted to its website Tuesday. The Supreme Court's conservative majority, in a 6-3 decision, ruled that OSHA had exceeded its authority.

"Although Congress has indisputably given OSHA the power to regulate occupational dangers, it has not given that agency the power to regulate public health more broadly," the court wrote in an unsigned opinion.

The Biden administration is ending its legal battle over the mandate — at least for now. OSHA will ask the U.S. Court of Appeals for the 6th Circuit to dismiss all cases related to the mandate, according to a Labor Department spokesperson. The administration had faced dozens of lawsuits from Republican-led states, private businesses, religious groups and national trade associations. The 6th Circuit has jurisdiction over those cases.

OSHA issued the mandate under its emergency powers, which the agency can use to shortcut the normal rulemaking process if the labor secretary determines workers face a grave danger. The agency's emergency rules also serve as proposals for permanent regulations. OSHA left open the possibility that it might try to finalize a permanent vaccine and testing rule in the future.

"OSHA is evaluating the record and the evolving course of the pandemic. OSHA has made no determinations at this time about when or if it will finalize a vaccination and testing rule," the Labor Department spokesperson said.

However, it's unlikely that a vaccine and testing mandate would fare any better under the agency's normal process. The Supreme Court's conservative majority was mostly concerned about the scope of the mandate, rather than how it was issued.

Under the defunct rule, businesses with 100 or more employees had to ensure their employees were fully vaccinated, or submitted a negative Covid test weekly to enter the workplace. It would have covered some 80 million private-sector employees.

The Supreme Court's decision was a major blow to President Joe Biden's strategy to control the spread of the virus. Biden has called on businesses to voluntarily implement the requirements.

Labor Secretary Marty Walsh has vowed that OSHA will use its existing powers to protect workers from Covid. OSHA still has general authority to investigate and fine employers if they fail to maintain a safe workplace.

The U.S. reported a seven-day average of more than 731,000 new daily infections, an increase of 4% over last week, according to a CNBC analysis of data from Johns Hopkins University. Though new infections are plateauing, they have stalled at significantly higher levels than in past waves.

OSHA on Tuesday said it will shift resources to focus on creating a permanent Covid safety standard for health-care workers. The agency issued temporary emergency rules for the industry last summer, but it pulled them in December after missing a deadline to create a permanent safety standard.

The health-care Covid safety standard required most facilities to provide personal protective equipment, install physical barriers in certain areas, clean and disinfect the workplace and maintain proper ventilation among a number of other measures.

The AFL-CIO and National Nurses United, among other labor groups, have asked a federal appeals court to force OSHA to reinstate the safety rules for health-care workers. OSHA, in a court filing, said it was unable to finish a permanent rule for health-care workers because its resources were tied up preparing the business mandate.

Hospitals around the U.S. are grappling with a surge of patients infected by the highly contagious omicron variant. There are about 155,000 patients in U.S. hospitals with Covid, according to a seven-day average of Department of Health and Human Services data, higher than peak levels seen last winter but down 2.4% from one week ago.

Many hospitals are facing staff shortages as health-care professionals are forced to call out sick after getting infected with the omicron variant.

"Many places across the country are getting to the point where even their backup staff are getting sick," Dr. Gillian Schmitz, president of the American College of Emergency Physicians, told CNBC earlier this month. "Pretty much the whole country right now is feeling this surge of cases that is impacting staffing."