In a proposed rule in today's Federal Register, the Department of Housing and Urban Development seeks to hold "disparate impact" practices illegal under the Fair Housing Act, even when there is no intent to discriminate. If a disparate impact is shown, a defendant would have the burden of proof of justifying its actions. This rule would give the federal government (as well as private litigants) the authority to sue landlords and cities over any number of common practices that could be argued to have a disparate impact: credit and criminal-history checks of renters, zoning laws against multifamily housing, public-housing decisions, even, as the rule suggests, local-and-state-government tax credit policy. Indeed, any practice has a "discriminatory effect," as defined by the statute, unless by coincidence it affects all races and protected classes equally, the odds of which would be astronomical.
We have already seen the perverse effects of disparate-impact litigation on housing lenders. One would hope Congress would want to act to push back on this proposed expansion of HUD authority.
Comments are due January 17, 2012.