Capitol Correspondence - 03.21.23

HUD Rescinds 2020 Rule and Formally Restores Discriminatory Effects Standard

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On Friday, the U.S. Department of Housing and Urban Development (HUD) announced that it has submitted a Final Rule entitled Restoring HUD’s Discriminatory Effects Standard to the Federal Register for publication. The Final Rule rescinds the 2020 rule governing Fair Housing Act disparate impact claims and restores the 2013 discriminatory effects rule. Due to a preliminary injunction staying the implementation of the 2020 Rule in Massachusetts Fair Housing Center v. HUD, the 2020 Rule never went into effect. Accordingly, regulated entities that were complying with the 2013 Rule have no need to change any practices they have in place to comply with this rule.

HUD emphasized that the 2013 rule is more consistent with how the Fair Housing Act has been applied in the courts and in front of the agency for more than 50 years. The 2013 rule more effectively implements the Act’s broad remedial purpose of eliminating unnecessary discriminatory practices from the housing market.

According to HUD Secretary Marcia L. Fudge, discrimination in housing continues today, and individuals, including people of color and people with disabilities, continue to be denied equal access to rental housing and homeownership. “Today’s rule brings us one step closer to ensuring fair housing is a reality for all in this country,” she said.

The Fair Housing Act prohibits discrimination in housing and housing-related services because of race, color, religion, national origin, sex (including sexual orientation and gender identity), familial status, and disability. The discriminatory effects doctrine is a tool for addressing policies that unnecessarily cause systemic inequality in housing, regardless of whether they were adopted with discriminatory intent. It has long been used to challenge policies that unnecessarily exclude people from housing opportunities.

Under the 2013 rule, a policy that had a discriminatory effect on a protected class was unlawful if it was not necessary to achieve a substantial, legitimate, nondiscriminatory interest or if a less discriminatory alternative could also serve that interest. The 2020 rule complicated that analysis by adding new pleading requirements, new proof requirements, and new defenses. All of these made it more difficult to establish that a policy violates the Fair Housing Act and harder for entities regulated by the Fair Housing Act to assess whether their policies were lawful.

For further information, please reference HUD’s Fact Sheet.