October 18, 2019 — The Fair Housing Act (FHA) prohibits discrimination in housing on the basis of race, color, sex, disability, familial status, or national origin. However, in many cases, seemingly neutral housing policies and practices of landlords and governments have discriminatory impacts on these protected populations. The disparate impact standard allows renters, homeowners and communities suffering from these discriminatory policies to seek legal remedy. In February 2013, under the Obama administration, the Department of Housing and Urban Development (HUD) established a revised disparate impact rule codifying that liability may be established under the Fair Housing Act when a challenged practice actually or predictably results in a disparate impact on a protected class of persons, even if it was not motivated by discriminatory intent.
In August 2019, under the Trump administration, HUD proposed a rule to amend its interpretation of the disparate impact standard. HUD’s Proposed Rule creates elevated standards for pleading and proving disparate impact claims and offers new defenses for defendants. In doing so, the Proposed Rule guts a critical protection afforded under the Fair Housing Act and flies in the face of the intentionally broad remedial purposes of the Act and civil rights law generally.
The Public Interest Law Center submitted two comments in opposition to the proposed changes. One comment, submitted by Law Center Independence Fellow George Donnelly, describes persistent housing segregation in Philadelphia and the disparate impact standards’ importance as a tool to take this on. The Law Center also submitted a joint comment in collaboration with the Chicago Lawyers’ Committee for Civil Rights, Lawyers for Civil Rights, and the Washington Lawyers’ Committee for Civil Rights and Urban Affairs. This comment, to which Law Center attorney Mary Beth Schluckebier contributed, reviews in detail how the proposed rule conflicts with existing law, judicial directives, and Congressional intent, and will unfairly insulate from liability landlords and policymakers whose actions contribute to discrimination.
In the comments, the Law Center asserts that HUD’s Proposed Rule strips critical protections afforded under the FHA, making it virtually impossible to challenge discriminatory housing practices. The comments dismantle HUD’s claim that it must overhaul the disparate impact standard set forth in HUD’s 2013 rule, including its burden-shifting approach, definitions, and causation standard, to better align the 2013 Rule with the Supreme Court’s decision in Inclusive Communities Project. . Rather, the comments contend that the case affirms the recognition of disparate impact claims as central to the FHA’s purpose of prohibiting racial segregation in housing.
As George Donnelly reviewed in his public comment, the disparate impact standard has particular relevance in Philadelphia, a city that remains heavily segregated. In one of the Law Center’s first cases, Shannon v. HUD, the Law Center challenged a HUD housing plan that would have resulted in increased racial and economic segregation in Philadelphia. The case relied on the disparate impact framework to set a precedent for HUD to assess the racial impact of its projects.
Today, Philadelphia is the fourth most segregated major city in the country. Black Philadelphians live largely in North and West Philadelphia and white Philadelphians are concentrated in Center City, South Philadelphia, and the Northeast. Living in segregated communities has been shown to negatively impact a number of outcomes for people of color such as life expectancy, employment levels, income, and mortality rates. The Law Center’s work with clients, as well as its own research, has also shown that racially segregated neighborhoods have a significantly higher rate of housing code violations. It is clear that discrimination in housing is still an issue that must be addressed, and HUD’s proposed guidance on the disparate impact standard decimates an important tool with which to do so.
It is clear that discrimination in housing is still an issue that must be addressed, and HUD’s proposed guidance on the disparate impact standard decimates an important tool with which to do so.
As our joint comment with other Lawyers’ Committee affiliates reports, the 2013 Rule maintains a delicate balance between the interests of the plaintiff and defendant. Under the current framework, in order to have a claim accepted by the court, a plaintiff must have statistical proof of a disproportionate impact. Once a plaintiff does this, the defendant is able to argue that the challenged policy serves legitimate and necessary interests. If the policy serves necessary interests, the plaintiff must show how these interests could be met via a different policy that does not yield a discriminatory effect.
HUD’s Proposed Rule alters this three-step framework by substantially heightening the requirements for plaintiffs. Under the Proposed Rule, a plaintiff must prove that the challenged policy is “arbitrary, artificial, and unnecessary” prior to even accessing discovery or evidence. The revisions would illogically force plaintiffs alleging discrimination to prepare defenses to potential rebuttals before ever filing a complaint. The comments review several successful disparate impact cases that would surely be dismissed under the Proposed Rule’s new burdensome standards.
The Proposed Rule further harms plaintiffs by exempting defendants from liability for relying on algorithmic models for tenant screening or other purposes. Under the Proposed Rule, landlords and local governments may simply point to their use of algorithmic models as an adequate defense for policy or practices that create a disparate impact. Ultimately, this protection under the Proposed Rule significantly reduces or removes incentive for defendants to choose non-discriminatory algorithms, and imposes a burden on the typically under-resourced aggrieved parties seeking civil rights protections.
By imposing onerous and troublesome requirements on plaintiffs, the Proposed Rule severely limits the ability of communities, renters and homeowners to challenge discriminatory housing policies.
The Proposed Rule also attempts to overturn long held court and HUD interpretation by imposing new requirements on plaintiffs to identify a less discriminatory alternative that is “equally effective,” and that does not impose a materially greater cost or burden on the defendant. As a result, for the first time, the Proposed Rule effectively introduces a profit defense to justify discriminatory practices – a result completely at odds with civil rights law.
Ultimately, the Law Center’s comments against the Proposed Rule argue that the rule violates HUD’s core obligation to ensure and further fair housing under the FHA. By imposing onerous and troublesome requirements on plaintiffs, the Proposed Rule severely limits the ability of communities, renters and homeowners to challenge discriminatory housing policies. The Proposed Rule is at odds with some of the most important policies and values that underpin an equitable society. As such, the Law Center’s comments propose that HUD abandon changes to the 2013 Rule.