As predicted in this space a couple of months ago, on June 20, 2018, the U.S. Department of Housing & Urban Development (HUD) published a notice of proposed rulemaking in the Federal Register entitled “Reconsideration of HUD’s Implementation of the Fair Housing Act’s Disparate Impact Standard.”

What’s going on here?  Here is a summary, in English (as opposed to legalese):

“Disparate impact” involves testing a rule or a policy that looks neutral on its face, but which has a discriminatory impact on a protected class. While the phrase “disparate impact” is not contained in the text of the Fair Housing Act (FHA), courts have read the phrase into the law, most recently with a 2015 U.S. Supreme Court decision, which held, by a 5-4 margin, that “disparate impact” can be used in certain circumstances. It was clear to the Obama Administration that a “disparate impact” case was likely to reach the Supreme Court (as two prior FHA cases were accepted by the high court but those matters settled prior to the justices issuing a decision).

In an effort to bolster the use of “disparate impact” in fair housing cases, HUD adopted a Disparate Impact Rule (if I recall correctly, in 2013) discussing how “disparate impact” can and should be used in fair housing matters. Now, the Trump Administration is taking another look at HUD’s 2013 rule to see if indeed it is consistent with the Supreme Court’s 2015 FHA decision.

With its notice, HUD is requesting public comments related to:

  1. Are the Disparate Impact Rule’s burdens of proof appropriately assigned?
  2. Does the Disparate Impact Rule’s definition of “discriminatory effect” strike the appropriate balance for legitimate claims? In other words, are legitimate claims protected and are unmeritorious claims discarded?
  3. Should there be a safe harbor or other defenses to claims of “disparate impact” liability?
  4. Should the Disparate Impact Rule be revised to improve clarity, reduce uncertainty, decrease regulatory burdens, or assist the housing community and the public in determining just what is lawful under the FHA?

Comments to HUD are due on or before August 20, 2018. I am not breaking new ground here in predicting the Trump Administration’s view concerning the appropriateness of “disparate impact” in fair housing claims will be different from that of the Obama Administration.

As the lawyer for professional apartment management, my view continues to be that I want clarity in the law. I want to be able to tell my clients the rules of the road. If “disparate impact” is included in the FHA, fine. If it is outside the statute, just let us know. Uncertainty, however, is not helpful as we attempt to provide the best advice we can.

There will be more to come here.

Just A Thought.