Mount Holly and the future of disparate impact: history, deference, and constitutional avoidance

by Deepak Gupta 

Equal-housingOn April 4, 1968, Dr. Martin Luther King Jr. was
assassinated as he stood on the balcony of the Lorraine
Motel in Memphis. His killing sparked a fresh round of riots in cities nationwide. Nearly two dozen representatives
immediately changed positions and urged passage of
the Fair Housing Act. Within a week, with armed National Guardsmen still quartered in the
basement of the Capitol to protect it from surrounding
violence, the House passed the Act and President
Johnson signed it into law. The legislators who voted for the Act sought to
combat the “practical effect" of facially neutral policies (not just overt discrimination) that resulted in residential segregation in American cities.

Mount Holly, a major civil rights case now before the U.S. Supreme Court, has big implications for whether the intent of those legislators will continue to govern discrimination in housing and lending. Today, 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. You can find the rest of the papers in the case here.

Fair Housing Act broadly prohibits discrimination in the sale or rental of
housing and in housing-related brokerage and loan services. The Equal Credit Opportunity Act provides parallel protection in the consumer credit context. The question in Mount Holly is whether the FHA prohibits
policies and practices that have a discriminatory effecti.e., a
“disparate impact” on a protected class—in addition to instances of intentional
bias (“disparate treatment”). For
years, the federal government and private
parties have used disparate-impact theory to challenge discriminatory rental,
sale, and lending policies. HUD recently issued regulations embracing disparate impact. The CFPB has embraced it as well. And every
federal court of appeals to consider the issue (11 out of 11) has endorsed disparate impact as
a valid means of enforcing the Fair Housing Act’s promise of equal housing
opportunity. At issue in Mount Holly is continued vitality of this key
enforcement tool. 

Our brief focuses on history. We demonstrate that 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 touches on a difficult question lurking behind the case: What role, if any, should the constitutional-avoidance canon play?  And how does it intersect with ordinary principles of agency deference? The petitioner, the Township of Mount Holly, raises constititional objections based on the Equal Protection Clause and the Tenth Amendment. But those constitutional challenges aren't actually presented in the case and nobody has raised them in other cases. Should the Court nevertheless interpret the statute narrowly to "avoid" those issues? Does that mean that Chevron deference goes out the window?  

Here's our take in the brief: Constitutional avoidance is supposed to show judicial restraint and respect for Congress. But applying the constitutional-avoidance canon in Mount Holly—where no constitutional claims have been
presented, no similar claims have ever been asserted, and Congress has expressly stated that
the Act’s remedial scope fully extends to constitutional
limits—would show disrespect for Congress. The upshot
of doing so (no disparate-impact claims ever) would be the
same as reaching the potential constitutional issues not
presented and prematurely resolving them against disparate impact in all cases. That's the opposite of judicial restraint.

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