HUD Issues Request for Public Comment on Disparate Impact Regulation

In a move long sought by the American Bankers Association, the Department of Housing and Urban Development is formally seeking public comment on whether its rule implementing the Fair Housing Act’s discriminatory effects standard is consistent with the Supreme Court decision in Texas Department of Housing and Community Affairs v. Inclusive Communities Project. In an advance notice of proposed rulemaking unveiled today, HUD sought comments on several aspects of its disparate impact rule.

Specifically, HUD requested feedback on the rule’s burden-of-proof standard, the rule’s definition of “discriminatory effect” and whether it strikes the proper balance in encouraging legitimate legal claims, the need for clarification on the causality standard for a prima facie case under Inclusive Communities, the need for safe harbors and other revisions to the rule that could reduce uncertainty or undue burden.

The Supreme Court ruled in 2015 that “disparate impact” analysis to demonstrate discrimination claims is recognized under the Fair Housing Act, but it included key limitations that placed the burden of proof in disparate impact cases with the plaintiffs. ABA and the state bankers associations have long called on the regulatory agencies to include the Supreme Court’s reasoning in formal guidance and exam procedures, and have previously committed to collaborating with HUD to develop a rule consistent with the legal precedent set by the Inclusive Communities decision. For more information, contact ABA’s Rod Alba.