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New Proposed Disparate Impact Rule Moving in the Right Direction Thanks to You!

Disparate Impact

Several weeks ago, we informed you that NAA and NMHC are voicing strong support for the U.S. Department of Housing and Urban Development’s (HUD) proposed rule on disparate impact, which was published in the Federal Register on August 19. The rule proposes to amend the agency’s interpretation of the Fair Housing Act’s (FHA) disparate impact standard to better reflect the U.S. Supreme Court’s (SCOTUS) 2015 ruling in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc. (also known as “Inclusive Communities”).

A rental housing provider can be sued under disparate impact theory if the owner or operator implements a policy that is neutral on its face but nonetheless has an unintended, discriminatory effect on members of a protected class under the FHA. For example, rental housing providers risk scrutiny for alleged discrimination if they utilize resident screening policies that prohibit accepting any applicant with a felony conviction. Plaintiffs argue these policies have a disproportionate, negative impact on certain protected classes at higher rates than the general population. Using similar statistical analysis, blanket prohibitions against accepting any applicant with eviction history also have been challenged under disparate impact theory.   

As background, in 2013, HUD issued a final rule that formalized the agency’s position on disparate impact liability and establishes uniform standards to determine when a real estate practice or policy violates the FHA. Subsequently, the Supreme Court issued a milestone decision on disparate impact liability in Inclusive Communities, which created new limitations on the use of the standard. In response to HUD’s 2018 advance notice of proposed rulemaking (ANPR) on possible amendments to its disparate impact rule, over 1,000 NAA members and affiliates made their voices heard.

NAA and NMHC continue their review of the proposed rule and plan to submit comments by the deadline on October 18, 2019. Affiliate staff and members can take action prior to the October comment deadline through NAA's Advocacy 365 Action Center; view the letter and send by clicking here. The current proposal is a direct result of apartment industry advocacy. As you did for the ANPR, we need you again now to show strong support for the changes made by HUD and ask them for clarification on several outstanding issues that will help owners and operators craft better policies and procedures and defend against disparate impact litigation.

To learn more about disparate impact and our advocacy efforts, please contact Nicole Upano, NAA’s Director of Public Policy or visit the Disparate Impact page on the NAA website.