HUD Proposes Revised 'Disparate Impact' Rule

Last week, HUD published a proposed rule to amend the HUD interpretation of the Fair Housing Act’s disparate impact standard. HUD says the proposed rule as amended would provide more appropriate guidance on what constitutes unlawful disparate impact and would better reflect the Supreme Court’s 2015 ruling in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc.

The HUD-proposed disparate impact rule provides a framework for establishing legal liability for facially neutral practices that have unintended discriminatory effects on classes of persons protected under the Fair Housing Act. The rule has no impact on determinations of intentional discrimination. In its 2015 decision, the Supreme Court upheld the use of a “disparate impact” theory to establish liability under the Fair Housing Act for business policies and local ordinances even if the policy or ordinance is neutral—in intent and application—if it disproportionately affects a protected class without a legally sufficient justification.

“There is a lack of affordable housing in America today,” HUD Secretary Ben Carson said in a statement. “This proposed rule is intended to increase legal clarity and promote the production and availability of housing in all areas while making sure every person is treated fairly under the law. As we have shown time and again, we will challenge any practice that discriminates against people that the law protects. At the end of the day, this rule not only increases Americans’ access to fair and affordable housing, but also permits businesses and local governments to make valid policy choices."