HUD sent proposed changes to the disparate impact regulations to the Office of Information and Regulatory Affairs (OIRA) at the Office of Management and Budget (OMB) on February 1. HUD previously published an advance notice of proposed rulemaking (ANPR) in the Federal Register on June 20, 2018 seeking public comment on possible amendments to HUD’s 2013 final rule implementing the Fair Housing Act’s disparate impact standard (see Memo, 6/25/18).
In the ANPR, HUD acknowledges that the Supreme Court upheld the use of disparate impact theory to establish liability under the Fair Housing Act in cases where seemingly neutral practices have a discriminatory impact on protected classes of persons. HUD went on to state that the Court “did not directly rule upon it [the disparate impact rule],” hence HUD sought public input on whether the regulation is consistent with the Court’s ruling in Texas Department of Housing and Community Affairs v. Inclusive Communities.
The February 1 OIRA posting does not provide any more detail than the ANPR. Under Executive Order 12866, proposed changes to regulations must be reviewed by OIRA, which technically then has 90 days before sending them back to HUD for publishing in the Federal Register. Once published, the public will have 60 days to submit comments to HUD. NLIHC will continue monitoring the OIRA site and inform readers once the proposed rule has been cleared by OIRA, and alert readers when a proposed rule is published in the Federal Register.
For many years HUD interpreted the Fair Housing Act to prohibit housing practices that have a discriminatory effect, even if there was no apparent intent to discriminate. All eleven courts of appeal that considered the issue agreed. There were minor variations, however, in how the courts and HUD applied the discriminatory effects concept. A February 15, 2013 regulation was therefore issued to establish uniform standards for determining when a housing practice with a discriminatory effect violates the Fair Housing Act.
The final rule standardized a three-step “burden-shifting” approach that HUD has used and that most appeals courts have applied.
- 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 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.
The February 1 OIRA posting is at: https://bit.ly/2Sg2DSa
The June 20, 2018 Advance Notice of Proposed Rulemaking is at: https://bit.ly/2lqfXAT
NLIHC’s comment letter in response to the ANPR is at: https://bit.ly/2PvX9hd
More about disparate impact is on page 7-1 of NLIHC’s 2018 Advocates’ Guide at: https://bit.ly/2IcZlWK