A little wonky fair housing policy today. Last week, the U.S. Department of Housing & Urban Development (HUD) issued proposed new rules to amend how HUD interprets “disparate impact” under our federal Fair Housing Act (FHA). Public comment on HUD’s proposal is due on or before October 18, 2019.

I try never to do politics here in the Fair Housing Defense Blog. My goal is to call balls and strikes with the best guidance that is available. Here is where we are in mostly non-legalese: Back in 2013, the Obama Administration sought to clarify that “disparate impact” (policies that appear neutral on their face but which have a significant negative impact on a protected class or classes without a legitimate business justification) was included in the FHA, even though the words “disparate impact” are not in the statute. Since passage of the FHA back in 1968, any number of courts had approved of using “disparate impact” to prove housing discrimination. In a 2015 case (decided by a 5-4 vote), the U.S. Supreme Court approved the use of disparate impact in housing cases, but included certain defenses for management as well as various hurdles a plaintiff must prove. With these new proposed rules, the Trump Administration seeks to pull back from the Obama Administration interpretation.

In short, the new rules will make it harder for a plaintiff’s claim to survive a motion to dismiss and/or a motion for summary judgment. HUD describes its change as intended to ensure the “disparate impact” rules are in “closer alignment” with the Supreme Court’s decision from 2015. In the text, HUD proposes to remove a defendant’s burden to prove a substantial business reason for the challenged policy and instead mandates that a plaintiff prove the policy is unnecessary to achieve a legitimate business interest. Furthermore, the new rule describes how a housing management company or property owner could defend against disparate impact claims by use of an algorithm (fancy word for a computer model) in its housing policies. Finally, another change is that HUD now suggests the burden of proof should be shifted such that a plaintiff will need to prove each element by a preponderance of the evidence.

The takeaway? Even if these new rules go into effect, “disparate impact” claims will still technically be cognizable under the FHA. Professional apartment management will still need to ensure our policies do not have a disproportionate negative impact on a protected class or classes. But if management faces a “disparate impact” case, it is likely there will be more defenses available to assist in defending against the case.

Just A Thought.