For the Third Time, Supreme Court Takes Up Disparate-Impact in Fair Housing

by Deepak Gupta

Perhaps betting that the third time's a charm, the Supreme Court this morning once again granted a petition over whether disparate-impact claims — based on seemingly neutral practices with discriminatory effects — are cognizable under the Fair Housing Act. The case, Texas Deparatment of Housing and Community Affairs v. The Inclusive Communities Project, involves claims that the state of Texas violated the Act by disproportionately awarding low-income housing tax credits to developers who own properties in poor, minority-dominated neighborhoods. Based on the face of the Fifth Circuit's opinion, this looked like a poor vehicle; the court of appeals held only that the Department of Housing's regulations apply and remanded for further consideration; the decision didn't seem to actually present the question raised by the petition. That the Court granted anyway (and ditched the petition's second question about what standard should govern disparate-impact claims) isn't a great sign for those who favor the availability of disparate-impact claims.

This is a huge issue in consumer and civil rights law and it's clear that the conservatives on the Court have been eager to hear it for some time. As we've discussed on this blog, the Court previously granted two other cases on this issue in recent years (Mount Holly and Magner v. Gallagher). Both cases settled before the Court could decide them. When the Mount Holly case settled last November, I noted that the "settlement amounts to a temporary stay of execution for a critically important civil-rights enforcement tool. 11 of the 11 circuits that have considered the question have concluded that disparate-impact claims are indeed cognizable under the FHA. In light of that unanimity, and the federal government's longstanding position, the Court's decision to grant certiorari on the question twice in two years cannot bode well for disparate impact. That's why civil rights and consumer advocates were so eager for a settlement."

In Mount Holly, my colleague Jon Taylor and I filed a brief on behalf of current and former members of Congress, including Senator Edward Brooke—one of the two key sponsors of the Fair Housing Act of 1968—focusing on why the Act, understood in its proper historical context, was intended to allow disparate-impact claims. That was true when the Act was first enacted in 1968 and it was even more apparent in 1988, when Congress revised the Act. By that point, the strong and uniform consensus in the courts of appeals was that disparate impact claims are cognizable. That was also HUD's position. The main effect of the 1988 legislation was to delegate considerably more enforcement authority to HUD. If Congress didn't want to continue allowing disparate-impact claims, it would have been very strange to give the agency far more authority without altering the scope of substantive liability. Congress also added new language that presupposed the existence of disparate-impact liability and repeatedly rejected attempts to introduce an intent requirement. The brief also discusses some interesting questions about the interaction between constitutional-avoidance and agency-deference principles that lurk behind these cases.

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