New, Leaked Disparate Impact Standard from HUD

HUD’s forthcoming Notice of Proposed Rulemaking regarding the Discriminatory Effects Standard was recently leaked to Politico. The leaked proposed rule comes after an advance notice of proposed rulemaking in 2018 on Reconsideration of HUD’s Implementation of the Fair Housing Act’s Disparate Impact Standard. HUD claims that the proposed rule will bring its disparate impact standard in line with the 2015 Supreme Court ruling in Texas Department of Housing and Community Affairs v. Inclusive Community Project, Inc. Under the Supreme Court’s ruling, plaintiffs are responsible for showing that defendants practices and policies result in an unjustified discriminatory effect, even if those practices were not motivated by discriminatory intent. Defendants must then demonstrate that are no other less discriminatory alternatives. The leaked notice of proposed rulemaking builds upon the Supreme Court’s ruling and proposes five steps for plaintiffs to bring a disparate impact claim:

  1. Plead that the challenged policy or practice is arbitrary, artificial, and unnecessary to achieve a valid interest or legitimate objective.
  2. Allege a robust causal link between the challenged policy or practice and a disparate impact on members of a protected class.
  3. Allege that the challenged policy or practice has an adverse effect on members of a protected class.
  4. Allege that the disparity caused by the policy or practice is significant.
  5. Allege that the complaining party’s alleged injury is directly caused by the challenged policy or practice. [Original emphasis].

On the second point, claims relying on statistical disparities must articulate how the statistical analysis used supports a claim of disparate impact by providing an appropriate comparison which shows that the policy is the actual cause of the disparity.

On the third point, plaintiffs must show that the policy or practice adversely affects members of a protected class as a group, not just an individual who happens to be a member of a protected class.

The Poverty & Race Research Council released a press statement condemning the proposed rule. HUD submitted the proposal to Congress on August 4 for a 15-day review period. The public will have 60 days to comment once it is published in the Federal Register.

In 2018, HUD halted submissions of communities Analysis of Fair Housing and withdrew the assessment tool for local governments, which effectively hamstrings the Obama administration’s Affirmatively Furthering Fair Housing rule.