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HUD seeks comment on the disparate impact rule
The Department of Housing and Urban Development issued an advance notice of proposed rulemaking (ANPR), seeking comment on if the 2013 Disparate Impact Rule should be revised in light of the 2015 Supreme Court ruling in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc. Comments must be submitted to HUD by August 20, 2018.
Ballard Spahr’s Richard J. Andreano, Jr. wrote:
While the Supreme Court held in Inclusive Communities that disparate impact claims may be brought under the FHA, it also set forth limitations on such claims that “are necessary to protect potential defendants against abusive disparate impact claims.” In particular, the Supreme Court indicated that a disparate impact claim based upon a statistical disparity “must fail if the plaintiff cannot point to a defendant’s policy or policies causing that disparity” and that a “robust causality requirement” ensures that a mere racial imbalance, standing alone, does not establish a prima facie case of disparate impact, thereby protecting defendants “from being held liable for racial disparities they did not create.” Significantly, while Inclusive Communities held that liability may be established under the FHA based on disparate impact, the district court subsequently dismissed the disparate impact claim against the Texas Department of Housing and Community Affairs based on the limitations on such claims prescribed by the Supreme Court in its opinion.
In the ANPR, HUD notes that in response to a notice it published in the Federal Register in May 2017 inviting comments to assist HUD’s identification of outdated, ineffective, or excessively burdensome regulations, it received numerous comments both critical and supportive of the Rule and taking opposing positions on whether the Rule is inconsistent with Inclusive Communities. HUD also notes that in a report issued in October 2017,
the Treasury Department recommended that HUD reconsider applications of the Rule, particularly in the context of the insurance industry. (We have previously reported on a challenge to the Rule by the American Insurance Association and National Association of Mutual Insurance Companies in D.C. federal district court.)
The ANPR contains a list of 6 questions of particular interest to HUD. Issues addressed in the questions include the Rule’s: burden of proof standard and burden-shifting framework; the definition of “discriminatory effect” as it relates to the burden of proof for stating a prima facie case; and the causality standard for stating a prima facie case. (National Law Review, Richard J. Andreano, Jr., 06/20/18)
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