HUD Signals Intent to Reconsider Disparate Impact Rule

HUD announced its intent to reconsider its February 15, 2013 Disparate Impact regulation, signaling a third attempt by HUD under Secretary Ben Carson to weaken its fair housing enforcement. In a media release on May 10, HUD indicated that it will formally seek public comment on whether the regulation is consistent with the U.S. Supreme Court decision in Texas Department of Housing and Community Affairs v. Inclusive Communities (see Memo, 6/29/15).

HUD’s first action against fair housing during this administration was its attempt to suspend the final rule implementing Small Area Fair Market Rents (SAFMRs) (see Memo 8/21/17), after which the U.S. District Court for the District of Columbia issued a preliminary injunction on December 23, 2018 in response to a suit filed by fair housing organizations. As a result of the injunction, HUD was forced to implement the SAFMR rule (see Memo, 1/8). HUD’s second action against fair housing came on January 5, 2018, when the department in essence suspended the Affirmatively Furthering Fair Housing (AFFH) final rule (see Memo, 1/8). This week three advocacy organizations filed suit against HUD for its suspension of the AFFH rule (see related article in this Memo to Members and Partners).

HUD’s media release 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 goes on to state that the Court “did not directly rule upon it,” hence HUD wants public input whether the regulation is consistent with the Court’s ruling in Texas v. Inclusive Communities.

For many years HUD interpreted the Fair Housing Act to prohibit housing practices that have a discriminatory effect, even if there was no intent to discriminate. Eleven courts of appeals agreed. There were minor variations, however, in how the courts and HUD applied the discriminatory effects concept. Therefore, the February 15, 2013 regulation was issued to establish uniform standards for determining when a housing practice with a discriminatory effect violates the Fair Housing Act (see Memo, 2/8/13).

The final rule standardized a three-step “burden-shifting” approach that HUD has used and that a majority of 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 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.

More about Disparate Impact is on page 7-1 of NLIHC’s 2018 Advocates’ Guide at: