NLIHC joined five other organizations in filing an amicus brief supporting a motion for summary judgment filed by HUD. The American Insurance Association and the National Association of Mutual Insurance Companies have an Administrative Procedures Act claim against HUD, challenging HUD’s disparate impact rule.
The other organizations on the amicus brief are the Lawyers’ Committee for Civil Rights Under Law, the LatinoJustice PRLDEF, the National Fair Housing Alliance, the National Housing Law Project, and the Poverty & Race Research Action Council.
The brief says that over the past two decades virtually all of the major homeowner insurance carriers have been the subject of Fair Housing Act enforcement actions based on claims of race discrimination in the underwriting, marketing, advertising, and sale of their products. As a result, many historical homeowner insurance underwriting and pricing policies, such as using dwelling unit age and minimum market value, have been successfully challenged under the Fair Housing Act on disparate impact grounds. In addition, insurers have abandoned explicitly race-based and geographically-based marketing plans.
In the 45 years since the Fair Housing Act was passed, and especially after the Fair Housing Act Amendments of 1988, federal courts, the federal government, and fair housing plaintiffs have successfully enforced the Fair Housing Act on the basis of disparate impact principles. Long before HUD formally promulgated its Disparate Impact regulation in February 2013 (see Memo, 2/8/13) courts struck down seemingly neutral housing practices because they were not based on legitimate business justifications, yet deprived minorities, persons with disabilities, families with children, and other protected classes of the full range of housing products and services available to others.
The HUD rule defines “discriminatory effect” as a practice that actually or predictably results in a “disparate impact” on a group of people or creates, increases, reinforces, or perpetuates segregated housing patterns because of race, color, religion, sex, handicap, familial status, or national origin.
The final rule standardizes a three-step “burden-shifting” approach that HUD has always used and that a majority of Appeals Courts have used.
- First, the party complaining that there is a discriminatory effect has the burden of proving that a practice caused or predictably will cause a discriminatory effect.
- Second, if the complaining party makes a convincing argument, then the burden of proof shifts to the defending party, which must show that the practice is necessary to achieve a substantial, legitimate, nondiscriminatory interest that cannot be served by another practice that has a less discriminatory effect.
- Third, if the defending party is successful, the complaining party can still succeed by demonstrating that the defending party’s substantial, legitimate, nondiscriminatory interest could be served by another practice that has a less discriminatory effect.