HUD announced on February 8 that it will issue a final rule to formalize the national standard for determining whether a housing practice or policy violates the Fair Housing Act because it has a discriminatory effect. A proposed disparate impact rule was published for comment on November 16, 2011 (see Memo, 1/20/12).Fair housing advocates welcomed the news that the long-awaited rule would finally be published. In a press statement, Wade Henderson, president and CEO of The Leadership Conference on Civil and Human Rights, said, “by releasing these regulations on disparate impact today, HUD is empowering municipalities across the country to enforce housing codes equally for all Americans and bolstering protections for those who face housing discrimination.” The Fair Housing Act regulations (24 CFR part 100) are amended, principally by adding add a new subpart G. The term “discriminatory effect” is defined there 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 also 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 has a “legally sufficient justification,” meaning it 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.
The final rule adds a new example of a prohibited practice, “enacting or implementing land-use rules, ordinances, policies, or procedures that restrict or deny housing opportunities or otherwise make unavailable or deny dwellings to persons because of race, color, religion, sex, handicap, familial status, or national origin.”For many years HUD has interpreted the Fair Housing Act to prohibit housing practices that have a discriminatory effect, even if there has been no intent to discriminate. Eleven courts of appeals have agreed. However, there have been minor variations in how the courts and HUD have applied the discriminatory effects concept. Therefore, the regulation is intended to establish uniform standards for determining when a housing practice with a discriminatory effect violates the Fair Housing Act.HUD states in a media release that the final rule will provide clarity and consistency for individuals, businesses, and government entities subject to the Fair Housing Act, making it easier to comply with the law.HUD Assistant Secretary for Fair Housing and Equal Opportunity John Trasviña said, “HUD is maintaining well-established legal precedent and formalizing a nationally consistent, uniform burden-shifting test for determining whether a given housing practice has an unjustified discriminatory effect.”The final rule has not yet been published in the Federal Register, but HUD made an advance copy available at http://1.usa.gov/TYLDem. The HUD media release is at http://1.usa.gov/TYLF60. A blog post on the rule from Secretary Donovan is at http://1.usa.gov/TYLKqr.