HUD’s proposed rule on disparate impact has cleared review by the Office of Information and Regulatory Affairs (OIRA) at the Office of Management and Budget (OMB). The proposal, which has been at OIRA since April 12, 2021 (see Memo, 04/19), would reinstate the 2013 Disparate Impact Rule. The rule will now be sent to the House Financial Services Committee and Senate Banking, Housing, and Urban Affairs Committee for a 15-day review period. After this review, a Notice of Proposed Rule Making (NPRM) will be published to the Federal Register, which will include a 60-day public comment period. HUD must review all public comments submitted and respond to significant, relevant comments when the final rule is published.
The previous administration had published in the fall of 2020 its final Disparate Impact Rule that would have shifted the burden of proof of discrimination from housing providers, financial institutions, and insurance companies to the victims of discrimination (see Memo, 09/14/2020). The previous administration’s drastic changes to the 2013 rule would have discarded the well-crafted and time-tested three-part shifting standard, replacing it with a set of tests intended to hurt the Fair Housing Act’s protected classes. This rule was set to go into effect on October 25, 2020 but was halted due to a preliminary nationwide injunction issued by the U.S. District Court for the District of Massachusetts (see Memo, 11/02/2020). The newly proposed rule will reinstate the 2013 Disparate Impact Rule—the regulation that is currently being followed due to the stay by the U.S. District Court of the previous administration's harmful rule.
This latest action by HUD was completed in accordance with a memorandum from President Biden to the secretary of HUD instructing the agency to redress the nation’s long history of discriminatory housing practices and reaffirming the administration’s commitment to end housing discrimination. The memo also ordered the HUD secretary to take the necessary steps to prevent practices that have a disparate impact (see Memo, 02/01).
More information about the Disparate Impact Rule is on pages 7-8 of NLIHC’s 2021 Advocates’ Guide