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Judge Rejects HUD’s Disparate Impact Rule

Published on November 6, 2014 by Jennifer Schwartz
Judge Rejects HUD’s Disparate Impact Rule

On November 3, US District Court Judge Richard Leon filed an opinion vacating HUD’s final rule on Implementation of the Fair Housing Act’s Discriminatory Effects Standard, commonly referred to as the Disparate Impact Rule.  The rule had codified HUD’s interpretation of the Fair Housing Act, which held that practices with discriminatory effects violate the Fair Housing Act, regardless of whether or not those practices intentionally discriminated against protected classes.  The judge ruled in favor of the plaintiffs, the American Insurance Association and the National Association of Mutual Insurance Companies, which claimed that HUD’s rule violated the Administrative Procedure Act by expanding the scope of the Fair Housing Act to recognize not only intentional discrimination, but also disparate impact.

This case is related to a separate disparate impact case that soon will come before the U.S. Supreme Court.  That case, the Texas Department of Housing and Community Affairs (TDHCA) v. Inclusive Communities Project, focuses on whether TDHCA violated the Fair Housing Act by disproportionately awarding Housing Credits to developers building properties in areas with high minority concentrations.

Judge Leon’s ruling is likely to make HUD’s soon-to-be finalized rule on Affirmatively Furthering Fair Housing (AFFH) even more central to its Fair Housing activities.  In connection with the AFFH rule, HUD has released its draft AFFH Assessment Tool for jurisdictions to use to comply with HUD’s AFFH rule.  As noted in previous blog posts, the Assessment Tool that is currently available for comment is specific to local jurisdictions and PHAs working in partnership with local jurisdictions.  However, NCSHA has asked state HFAs to provide us with comments on that Assessment Tool and how HUD must modify it to accommodate state needs when they issue their draft state Assessment Tool.  NCSHA is extending the deadline for states to provide us with their comments to Wednesday, November 12.  Please send your comments to NCSHA’s Jennifer Schwartz.