Entities | |
Topics and Issues | Disparate impact (2) |
In March 2023, HUD announced that
it has submitted to the Federal Register for publication a Final Rule entitled Restoring HUD’s Discriminatory Effects Standard. The Final Rule rescinds the Department’s 2020 rule governing Fair Housing Act disparate impact claims and restores the 2013 discriminatory effects rule. In the Final Rule, HUD emphasizes that the 2013 rule is more consistent with how the Fair Housing Act has been applied in the courts and in front of the agency for more than 50 years, and that it more effectively implements the Act’s broad remedial purpose of eliminating unnecessary discriminatory practices from the housing market.
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 was not necessary to achieve 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 more difficult to establish that a policy violates the Fair Housing Act and harder for entities regulated by the Fair Housing Act to assess whether their policies were lawful. HUD now returns to the 2013 rule’s straightforward analysis.
This Final Rule will go into effect 30 days after it is published in the Federal Register. Due to a preliminary injunction staying the implementation of the 2020 Rule in Massachusetts Fair Housing Center v. HUD, the 2020 Rule never went into effect, and the 2013 Rule – which has been in place for nearly a decade – has been and is currently still in effect. Accordingly, regulated entities that were complying with the 2013 Rule have no need to change any practices they have in place to comply with this rule.
Resources:
- Implementation of the Fair Housing Act’s Discriminatory Effects Standard, 78 Fed. Reg. 11560 (Feb. 15, 2013) (2013 Rule), 24 CFR § 100.500
- Texas Dep’t of Hous. & Cmty. Affairs v. Inclusive Communities Project, Inc., 576 U.S. 519, 524, 135 S.Ct. 2507, 192 L.Ed.2d 514 (2015)
- Application of the Fair Housing Act’s Discriminatory Effects Standard to Insurance 89 Fed. Reg. 69012 (October 5, 2016)
- HUD’s Implementation of the Fair Housing Act’s Disparate Impact Standard, final rule, 85 Fed. Reg. 60288 (Sept. 24, 2020) (2020 Rule) (September 2020).
- Prior to the effective date of the 2020 rule, the U.S. District Court for the District of Massachusetts issued a preliminary injunction in Massachusetts Fair Housing Ctr. v. HUD in October 2020, staying HUD’s implementation and enforcement of the rule. Consequently, the 2020 Rule never took effect.
- After reconsidering the 2020 Rule, HUD, in 2021, proposed to recodify its previously promulgated rule titled, Implementation of the Fair Housing Act’s Discriminatory Effects Standard (2013 Rule), which, as of the date of publication of this Proposed Rule in 2021, remains in effect due to the preliminary injunction. HUD believes the 2013 Rule better states Fair Housing Act jurisprudence and is more consistent with the Fair Housing Act’s remedial purposes. This 2021 restatement is entitled Reinstatement of HUD’s Discriminatory Effects Standard, 86 Fed. Reg. 33590 (June 25, 2021).
- HUD’s Final Rule on Restoring HUD’s Discriminatory Effects Standard of the 2013 Rule (March 2023)
- Fact Sheet (March 2023)
- Press release (March 2023)