HUD Proposes New Regulations to Clarify Disparate Impacts – Comments Due Oct. 18, 2019

On August 19, 2019 the Department of Housing and Urban Development published a proposed new regulation to among other things, “amend HUD’s interpretation of the Fair Housing Act’s disparate impact standard to better reflect the Supreme Court’s 2015 ruling in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc.,…”    See, https://www.federalregister.gov/documents/2019/08/19/2019-17542/huds-implementation-of-the-fair-housing-acts-disparate-impact-standard

Social justice advocates worry that the rule will set back a significant civil rights law: “The proposed regulation from the U.S. Department of Housing and Urban Development would replace an Obama-era rule on disparate impact, a legal theory that has guided fair housing law for more than 50 years. Disparate impact refers to practices or policies that have an adverse impact on minorities without discriminating against them in explicit terms. The Supreme Court has recognized this form of bias as prohibited under the Fair Housing Act. But the new rule from HUD would substantially raise the burden of proof for parties claiming discrimination….Under the current rule, disparate impact cases proceed by meeting a three-part burden-shifting test: A plaintiff makes an allegation, a defendant offers a rebuttal, then the plaintiff responds. The new rule would set a five-point prima facie evidentiary test on the plaintiff side alone. This means that a party looking to bring a discrimination case under the Fair Housing Act would need to establish some level of evidence in the pleading stage. To bring forward an accusation of implicit discrimination, plaintiffs would need to demonstrate—before any discovery process—that the policy itself is flawed.” https://www.citylab.com/equity/2019/08/fair-housing-act-hud-disparate-impact-discrimination-lenders/595972/

Critics also note, “Under the five-point burden test, plaintiffs would need to 1) prove that a policy is “arbitrary, artificial, and unnecessary” to achieve a valid interest; 2) demonstrate a “robust causal link” between the practice and the disparate impact; 3) show that the policy negatively affects “members of a protected class” based on race, color, religion, sex, family status, or national origin; 4) indicate that the impact is “significant”; and 5) prove that the “complaining party’s alleged injury” is directly caused by the practice in question. ‘This shifts so much of the responsibility to the plaintiff to make allegations nearly impossible, without having gone through a discovery process, of this tight causal link between the policy and the effect,’ says Urban Institute senior fellow Solomon Greene. https://www.citylab.com/equity/2019/08/fair-housing-act-hud-disparate-impact-discrimination-lenders/595972/