U.S. Department of Housing and Urban Development (HUD) Secretary Marcia L. Fudge announced on Thursday, June 24 that HUD will publish in the Federal Register a notice of proposed rulemaking (NPRM) entitled Restoring HUD’s Discriminatory Effects Standard. The publication proposes to rescind the Department’s 2020 disparate impact rule and restore the 2013 discriminatory effects rule. In its NPRM, HUD states that it believes the 2013 rule is more consistent with decades of caselaw and better effectuates the Act’s broad remedial purpose of eradicating unnecessary discriminatory practices from the housing market.
“We must acknowledge that discrimination in housing continues today and that individuals, including people of color and those with disabilities, continue to be denied equal access to rental housing and homeownership,” said Secretary Fudge. “It is a new day at HUD - and our Department is working to lift barriers to housing and promote diverse, inclusive communities across the country. Today’s publication of the proposed discriminatory effects rule is the latest step HUD is taking to fulfill its duty to ensure more fair and equitable housing.”
The public will have 60 days to file comments on the NPRM. HUD will review the comments, develop responses, and publish a final rule. In the meantime, HUD’s Office of Fair Housing and Equal Opportunity (FHEO) continues to vigorously enforce the Fair Housing Act, including addressing policies and practices by housing providers, lenders, insurers, appraisers, and others that cause unjustified systemic inequities based on race or other protected class.
The Fair Housing Act prohibits discrimination in housing and housing-related services because of race, color, religion, national origin, sex, familial status, and disability. The discriminatory effects (also referred to as disparate impact) doctrine is a tool for addressing policies that cause systemic inequality in housing. It has long been used to challenge policies that unnecessarily exclude people from housing opportunities, including zoning requirements, lending and property insurance policies, and criminal records policies. Accordingly, having a workable discriminatory effects standard is vital for the accomplishment of the Biden-Harris Administration’s policy goal of a housing market that is free from both intentional discrimination and policies and practices that have unjustified discriminatory effects.
HUD’s 2013 discriminatory effects rule codified long-standing caselaw for adjudication of Fair Housing Act cases under the discriminatory effects doctrine, for cases filed administratively with HUD and for federal court actions brought by private plaintiffs. Under the 2013 rule, the discriminatory effects framework was straightforward: a policy that had a discriminatory effect on a protected class was unlawful if it did not serve a substantial, legitimate, nondiscriminatory interest or if a less discriminatory alternative could also serve that interest. The 2020 rule complicated that analysis by adding new pleading requirements, new proof requirements, and new defenses, all of which made it harder to establish that a policy violates the Fair Housing Act. HUD now proposes to return to the 2013 rule’s straightforward analysis.