The U.S. Department of Housing and Urban Development (“HUD”) just moved to essentially nullify the Disparate Impact Rule by dismantling a 45-year-old precedent which provides time-tested protection against housing discrimination. The proposed dis-regulation would dramatically weaken disparate impact liability under the Fair Housing Act.
“HUD Secretary Carson states that his intent in this weakening of the Disparate Impact Rule would be to make more housing available. The effect of this proposed rule would be just the opposite,” said Ian Wilder, Esq., Executive Director of Long Island Housing Services, Inc. (LIHS). “The proposed weakening of the Disparate Impact Rule would actually lessen the availability of housing across the marketplace.”
“The current Disparate Impact Rule corrects the market failure to provide the same housing opportunities to all buyers regardless of their demographics, Wilder said. “A hollowing out of the Disparate Impact Rule would shield those who construct discriminatory barriers to achieving the American Dream of living where you want. These discriminatory barriers lessen access to housing; the opposite effect of what Secretary Carson hoped to achieve. Everyone who supports an open housing market must go to the Federal Register online before October 18, 2019 and submit a comment in opposition to this change to the Disparate Impact Rule under document #2019-17542.”
Codification and Affirmation of a Time-tested Rule
Drawing on decades of experience in enforcing the Disparate Impact Rule, HUD codified it only six years ago in a 2013 regulation. And only four years ago, the Supreme Court affirmed the Disparate Impact Rule in the 2015 landmark case, Inclusive Communities Project v. Texas Department of Housing and Community Affairs. The Disparate Impact Rule states that the Fair Housing Act bans practices that have an unnecessary disparate impact on particular groups including communities of color, immigrants, women, the faith community, people with disabilities, and families with children.
A policy or practice may constitute housing discrimination when it has a disparate impact on members of a protected group, regardless of whether there is intent to discriminate. “Disparate impact” is a longstanding and effective tool for addressing disparities in rental practices, lending, property insurance, zoning, and other activities that affect the availability of housing.
The disparate impact tool has played a critical role in advancing civil rights for underserved communities and for redressing the segregation that still persists decades after passage of the Fair Housing Act. It has been widely effective in redressing discriminatory practices in industries such as home lending and property insurance, thereby making housing more available to all. It does so by creating incentives for industries to find the least discriminatory alternative that still satisfies their legitimate business needs.
Detrimental effect of Weakening the Successful Rule
HUD’s proposed alteration to the rule makes unnecessarily drastic changes and institutes fatal exceptions to this longstanding enforcement tool. This proposal would destroy disparate impact liability as we know it, making it virtually impossible to bring the bedrock housing discrimination cases that have been brought using disparate impact.
There are four key provisions of the proposed rule. First it creates, overwhelming obstacles to prove discrimination: Victims of discrimination would face a drastically higher burden to prove a disparate impact claim under the Fair Housing Act, making it virtually impossible to succeed. Victims are asked to play a rigged game of whack-a-mole, trying to guess what justifications a defendant might invoke and preemptively debunk them.
Second, the proposed rule puts profits above all else. Language in the proposed rule suggests that a rule or policy that is profitable could be immune from challenge for its discriminatory impact—with the burden on discrimination victims to show that a company can make at least as much money without discriminating.
Third, the proposed rule encourages discrimination by algorithm. HUD’s proposed rule would provide special defenses for business practices that rely on statistics or algorithms. Disparate impact is a critical tool to rein in discrimination in the use of algorithmic models—such as credit scoring, pricing, marketing, and automated underwriting systems. These can have starkly discriminatory effects but can operate as a hidden box, making those discriminatory effects difficult to attribute to any person’s intentional discrimination. HUD’s proposed rule could effectively immunize such covert discrimination by algorithm.
Lastly, the proposed rule rewards a culture of no data, no records, and no accountability. Businesses are disincentivized to collect important data that can reveal discrimination. This means that victims of discrimination will be unable to identify whether discrimination is happening behind their backs and lack the ability to challenge it if they do detect discrimination.
People who believe that they have experienced housing discrimination who live in Nassau or Suffolk Counties, can contact Long Island Housing Services at 631-567-5111 ext 375 or email firstname.lastname@example.org. You can find out more about our Fair Housing here.
Founded in 1969, Long Island Housing Services (www.LIFairHousing.org) is a private, nonprofit HUD-qualified Fair Housing Enforcement Organization and a federally certified, approved Housing Counseling agency. The mission of Long Island Housing Services is the elimination of unlawful discrimination and promotion of decent and affordable housing through advocacy and education. The author and publisher are solely responsible for the accuracy of the statements and interpretations contained in this work.
Housing and Urban Development Department Proposed Rules
Implementation of the Fair Housing Act’s Disparate Impact Standard
Filed on: 08/16/2019 at 8:45 am
Scheduled Pub. Date: 08/19/2019
FR Document: 2019-17542
PDF 34 Pages (352 KB)
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