Impact Fund to Ben Carson: Don’t Eviscerate Disparate Impact Rule That Protects Against Housing Discrimination

Oct 30

When a state extends tax incentives to affordable housing developers in a way that effectively perpetuates segregated housing patterns, that is a form of unlawful discrimination prohibited by the federal Fair Housing Act. So said the U.S. Supreme Court in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, 135 S. Ct. 2507 (2015). In that case, the Supreme Court recognized that the Fair Housing Act forbids actions or conduct by housing authorities, developers, creditors, cities, and other actors that have a disparate impact. Disparate impact is a cornerstone of anti-discrimination law that prohibits policies or practices that appear neutral on their face but that result in an adverse effect on the basis of race, sex, or other protected characteristics. In the housing context, disparate impact is a critical tool to enforce the Fair Housing Act in order to achieve open, integrated housing markets and fight forms of illegal discrimination and segregation. Zoning restrictions, mortgage policies, and development decisions that disproportionately impact racial minorities have all been challenged through disparate impact liability.

In 2013, the U.S. Department of Housing and Urban Development (HUD), which is charged with enforcing the Fair Housing Act, issued a regulation that codified disparate impact under the Act. When the Supreme Court recognized disparate impact liability in Inclusive Communities, it took note of that rule. Yet now, the Trump Administration has proposed a revised regulation that eviscerates the Fair Housing Act’s protections and undermines the civil rights promises of the Fair Housing Act. HUD says that its proposal aligns the rule with judicial interpretations of disparate impact law, including Inclusive Communities, but it does nothing of the sort. Instead, the rule incorrectly twists the language of the Supreme Court and runs roughshod over settled case law on disparate impact. Should the rule come into effect, it would severely roll back these protections for our most vulnerable communities, and it would allow discriminatory conduct to flourish.

Ben Carson should really know better, but the Trump Administration has proposed a revised regulation that eviscerates the Fair Housing Act’s protections, making housing discrimination more likely.

Generally, before administrative agencies may adopt regulations, they must give the public opportunity to weigh in. That’s why earlier this month, the Impact Fund, joined by the non-profit workers’ rights organization Legal Aid at Work, filed a formal public comment with HUD opposing the proposed disparate impact revision. Our comment explains that the current rule ensures robust enforcement of the Fair Housing Act and should not be changed. The 2013 rule appropriately adopted the legal standard for disparate impact that courts, including the Supreme Court, have relied on for almost fifty years. This standard requires plaintiffs first to show that a policy or practice has an adverse impact on a protected group. Next, defendants must demonstrate that the policy is not discriminatory and that they needed it to achieve their business or otherwise legitimate interests. Plaintiffs then must show that defendants could have achieved those interests with an alternative that is less discriminatory.

Plans for a dream home can quickly become a nightmare if the revised regulation goes through.

We contend that the proposed rule upends this accepted standard and renders meaningless must of the federal courts’ robust interpretations of the Fair Housing Act. The proposal establishes a higher burden for plaintiffs to even allege disparate impact in the first instance. The burdens it exacts far exceed the demands of civil rights laws, especially the Fair Housing Act. Meanwhile, the proposed rule makes it easier for defendants to justify their discriminatory policies. It codifies a number of specific, concrete defenses, including that the discriminatory effect was caused by models or risk-assessment algorithms, and lowers the standard of proof that defendants must meet. Finally, the proposed rule requires plaintiffs to show that a less discriminatory alternative does not impose any financial constraints on the defendant. Yet plaintiffs have significantly less access to a business’s records and financial decision-making processes; defendants are far better equipped to present valid analyses of their costs and profits than plaintiffs are.

All in all, the proposal raises the bar for plaintiffs to show disparate impact, while lowering it for defendants. Consequently, defendants would enjoy greater incentives to engage in pernicious discriminatory conduct, which could further entrench residential segregation

No turning back. Resist the rollbacks and add your voice to keep our hard won protections in place.

HUD now must consider our comment, along with the hundreds of others submitted by civil rights organizations and concerned individuals opposing the proposal, before issuing a final rule. We encourage the department to retain the current disparate impact rule, which is the product of decades of civil rights jurisprudence and embodies the spirit and objectives of the Fair Housing Act in moving our nation toward an integrated society.

To learn more about disparate impact under the Fair Housing Act and stay involved go to the coalition website at Defendcivilrights.org.