Journalism in the Public Interest


How the Supreme Court Could Scuttle Critical Fair Housing Rule

The Obama administration is preparing to issue a rule setting a single standard for proving violations of the Fair Housing Act — just as the Supreme Court signals it may take up a challenge to the measure.

After Hurricane Katrina, a private fair housing group and the federal government used the disparate impact standard to challenge policies in the predominantly white St. Bernard's Parish, La., that prohibited residents from renting to anyone who was not a "blood relative." (File photo, Mario Tama/Getty Images)

UPDATE: The U.S. Department of Housing and Urban Development issued the final rule (PDF) on disparate impact under the Fair Housing Act today. In doing so, the agency formalized for the first time a national standard for establishing when housing practices that disproportionately harm racial minorities, the disabled and other protected groups violate civil rights law.

For the past four decades, federal officials and civil rights lawyers have wielded a potent legal weapon in the fight against housing discrimination. Even when they couldn't prove that practices of landlords, lenders or governments were racially motivated, they could win cases by showing minorities had suffered disproportionate harm.

The Obama administration has used the principle of "disparate impact" to reach record settlements with banks accused of discriminatory lending and to confront localities whose housing policies limited opportunities for black and Latino renters. A senior official recently said that the U.S. Department of Housing and Urban Development is pursuing more than two dozen cases based on the theory.

Those cases, and others brought by civil rights groups and other agencies, could soon be halted in their tracks. For the second time in two years, the Supreme Court is poised to review a case that challenges whether the concept of "disparate impact" can be used to enforce the 1968 Fair Housing Act.

Officials from the U.S. Department of Justice and HUD, the agency charged with enforcing the housing law, have repeatedly declined ProPublica's interview requests. But Sara Pratt, HUD's chief of enforcement, bluntly told attendees at a recent conference on housing issues that the disparate impact standard is essential for deterring housing bias because the days of "pants-down discrimination" have ended.

"Landlords, housing professionals, zoning and planning boards, have learned to stop talking about it," Pratt declared. "What they haven't learned is to stop doing it."

Over the past year, Obama administration officials have become increasingly concerned that the high court is preparing to strike down the use of the disparate impact standard in housing cases. In an attempt to dissuade the justices from intervening, the Obama administration is preparing to release a long-stalled federal rule this month that enshrines "disparate impact" in the regulations for enforcing the federal housing law.

The move comes as the Supreme Court, led by its conservative majority, appears set to curtail affirmative action and the Voting Rights Act, two other tent poles of the civil rights movement.

Disparate Impact, A Lynchpin of Enforcement

The principle of disparate impact is not directly mentioned in the landmark Fair Housing Act but has been accepted over a period of 40 years by a series of federal judges who have ruled on housing cases.

Housing advocates have been urging HUD to adopt the regulation for years. Because the Supreme Court has long deferred to an agency's regulations when interpreting the law, Alan Jenkins, executive director of the nonprofit The Opportunity Agenda in New York City, said it "could be the deciding factor, not only in what disparate impact means, but whether it exists after going before the Supreme Court."

In 2011, federal officials persuaded the city of St. Paul, Minn., to withdraw a case accepted for review by the Supreme Court that questioned whether the principle could be applied in housing cases. "We were afraid we might lose disparate impact in the Supreme Court because there wasn't a regulation," said Pratt, who also led fair housing enforcement during the Clinton administration.

If the court strikes down disparate impact, it would largely limit civil rights lawsuits against landlords, homeowners or governments to those rare cases in which it could be proven that governments or businesses had an explicit intent to discriminate.

"If the court overturns disparate impact," said Florence Roisman, a fair housing scholar at the Indiana University School of Law. "It is going to gut the statute."

Release of the regulation sometime this month will set a tone for President Obama's second term and several scholars said it would be among the most important civil rights regulations to come out of HUD in at least a decade. But its release may be too late to influence the high court's ruling.

Key Battles in Countrywide, Katrina Cases 

Even without the regulation, the Obama administration has aggressively pursued disparate impact cases.

Under President Obama, the Justice Department created a unit to focus on discriminatory behavior in the banking industry and has used disparate impact to win massive settlements.

In one such case, the Justice Department found that Countrywide — a now-defunct mortgage company purchased by Bank of America — charged black and Latino borrowers higher rates and fees than white applicants with similar credit histories. It also discovered that black and Latino borrowers who qualified for prime loans were more than twice as likely to be steered to subprime loans as similar white borrowers.

Countrywide issued no official policy telling loan officers to discriminate. But it did give them discretion to steer well-qualified buyers into less favorable loans. In what Assistant Attorney General Thomas Perez called "discrimination with a smile," that authority was used largely on loan applications from African Americans and Latinos. Bank of America could not produce a legitimate business practice to explain the discriminatory results, a defense against an action brought under the disparate impact standard. The bank settled with the Justice Department for $335 million in 2011 — a record in a residential lending case. It did not acknowledge wrongdoing.

In another major case, a private fair housing group and later the federal government used the disparate impact standard to challenge policies adopted by St. Bernard's Parish, La., after Hurricane Katrina.

As residents of largely black New Orleans sought to find housing in St. Bernard's, a predominantly white enclave just across the border, the parish passed a law that prohibited homeowners from renting to anyone who was not a "blood relative" unless they received a permit from local authorities.

Since 93 percent of the homeowners in the parish were white, the government argued that the laws aimed at restricting rental housing would have disproportionately prevented people of color from moving in.

"Do you think St. Bernard's parish was really trying to keep black people out?" Pratt asked at the housing issues conference. As heads began to nod, she asked, "Does anyone have any evidence?"

The administration, which has seen the fight over disparate impact building for several years, promised early in Obama's first term that it would issue a regulation.

Advocates cheered. Then they waited. And waited.

Mondale Warns Against Supreme Court Decision

By 2011, a case that had been winding its way through the lower courts landed at the Supreme Court.

A group of landlords had sued St. Paul claiming that its stepped up property code enforcement violated the Fair Housing Act because it reduced the availability of low-income rental units and had a disparate impact on black residents.

Since the landlords were essentially arguing that the anti-discrimination laws gave them a right to not maintain apartments in black areas, the city of St. Paul fought the suit.

The U.S. Court of Appeals for the Eighth Circuit ruled the landlords had made a valid disparate impact claim, prompting St. Paul to appeal, arguing that the Fair Housing Act required proof of discriminatory intent and not simply discriminatory results.

A week after the Supreme Court agreed to hear the case in November 2011, HUD finally released a proposed regulation, which set a single standard for proving violations of the Fair Housing Act. The proposed rule codifies within federal regulations the ban on practices that have discriminatory effects unless they can be shown to serve a legitimate purpose for business or government.

Although all 11 appellate courts that have ruled on the issue have held that the Fair Housing Act allows disparate impact claims, the Justice Department and housing advocates feared the conservative majority on the Supreme Court would not agree.

Minnesota native son former Vice President Walter Mondale, who helped write the 1968 law, urged St. Paul's mayor to withdraw the case. According to news accounts, Mondale called disparate impact the only means of effectively enforcing laws against housing discrimination and asked the city not to risk a "Supreme Court decision that ruins the act."

The Justice Department agreed not to intervene in two unrelated lawsuits against the city, a move now under investigation by congressional Republicans who say the administration offered the concession to persuade St. Paul to drop the disparate impact suit.

St. Paul acquiesced, and in February 2012 the parties took the rare step of withdrawing the case from the Supreme Court's docket.

The Fight From Big Business

Meanwhile, lobbyists for the influential banking, lending, and insurance industries launched a broad campaign against the draft rule.

Robert Detlefsen, vice president of public policy for the National Association of Mutual Insurance Companies, said his organization, which represents home insurers, opposes the regulation because it would place an unfair burden on companies to prove that policies that harm one group more than another are not discriminatory.

Businesses should not be penalized "because of a statistical disparity," Detlefsen said. "As long as it could be shown that there was no intent to discriminate racially or ethnically, there should be no controversy."

The American Bankers Association, the National Multi Housing Council and the Mortgage Bankers Association either declined or did not respond to interview requests from ProPublica.

The business community's pushback seemed to work.

"The proposal was on the table last year at this time. As you got into July and August, the White House just let it be known that 'We just can't do it in this political season,'" said Robert Schwemm, a constitutional law and civil rights scholar at the University of Kentucky Law School. "Just to rattle off the groups that have decided to oppose it is to list some of the most powerful groups in Washington, even with a Democratic administration.

"The Obama administration delayed, delayed, delayed."

Pratt acknowledged as much during her presentation. "The industry doesn't like it. They are scared of it," she said. "Disparate impact is incredibly controversial politically. It is not controversial legally."

With Obama fighting his final re-election battles in October, the Supreme Court signaled that it might take up the issue again. The Court asked the U.S. Solicitor General to submit the government's stance on disparate impact in a case involving the New Jersey township of Mount Holly. It has not yet decided to hear the case.

An Eleventh-Hour Effort

At issue is the town's efforts to redevelop a predominantly black area it considered blighted. The town bought and destroyed most of the homes in the neighborhood but has not built the new housing. Former and current residents sued, saying the town's actions had a disparate impact on African Americans.

After a court ruled the plaintiffs had a valid disparate impact claim, Mount Holly appealed to the Supreme Court, arguing as St. Paul had that Congress did not write disparate impact into the fair housing statute and therefore did not intend to allow it to be used as a legal standard.

Mount Holly's appeal did not shake the regulation loose — to the dismay of some observers. "It is enormously important that HUD promulgate this statute," said Roisman. "Frankly, I think it is unconscionable that HUD hasn't done it in the last four years — they should have done it long before that." Most scholars interviewed for this story believe that Justices John Roberts, Clarence Thomas and Samuel Alito would strike down disparate impact, but are less sure about the stances of Justices Antonin Scalia and Anthony Kennedy. One of them would have to join the Court's liberal block if disparate impact were to survive.

Scalia indicated in a previous case involving employment that he was open to an argument that disparate impact in any arena violated the equal protection clause of the Constitution. However, Scalia, who was an administrative law scholar before becoming a constitutional law scholar, has also said he believes in deference to agency regulations.

But several legal scholars pointed out that the Court's track record under Chief Justice Roberts provides little certainty that it will follow that precedent.

john a. powell, a civil rights scholar at the University of California, Berkeley Law School, said the Supreme Court would not normally take a case such as this one where the lower courts are unanimous in their interpretation of the law. But powell, who spells his name without capital letters, said this court has shown an eagerness to dismantle civil rights protections even when case law is well established — one reason for concern that HUD's new regulations may not stand.

"If [the Supreme Court] is going to ignore the circuits and decades of precedents from the federal courts, I don't know that it is going to be turned around by the regulation of an agency," powell said. "It is not waiting on controversy in the lower courts, which is the normal case. If it strikes down disparate impact that would be a huge change, but the Court is rewriting issues around civil rights and race."

The administration's 11th-hour release of the regulation may have served mostly to rally the opposition. Detlefsen said his group did not file briefs opposing disparate impact in the St. Paul case, but likely will if the Court takes up the Mount Holly case. "The regulation has gotten the attention of a lot of people in the insurance industry," he said. "Absolutely."

Civil rights advocates are watching, too.

"The search for racists is for the most part a fool's errand. There is no way in a court of law to prove or know what is in someone's hearts or minds," Damon Hewitt, an attorney at the NAACP Legal Defense and Education Fund, said at the housing conference. "The preoccupation with disregarding racially disparate impact means people are willing to accept racial disparities and then say there is nothing the law should do about it."

Keep up with our investigations by following us on Facebook and Twitter, or read more about the Fair Housing Act, and how the government betrayed a landmark civil rights law

Roger Clegg, Ctr for Equal Opportunity

Feb. 8, 2013, 9:36 a.m.

The disparate-impact approach is bad law and bad policy, especially in the housing area.  Here’s hoping the Supreme Court grants review in the Mt. Holly case and puts an end to this nonsense.  For a discussion of why the disparate-impact approach should be rejected, see this brief:

Fine job exposing the risk to disparate impact doctrine from the current Supreme Court (and perhaps a needed stimulus to advocates to work to embed disparate impact in state and local anti-discrimination statutes).

But the article does not mention another threat to disparate impact: that HUD’s final rule, like its draft, will significantly water down the doctrine.

The agency was put on fair warning of the defects in its draft by a slew of comments from civil rights advocates (ADC’s comments can be found here:; we’ll see if HUD, as it has done in the past, chooses to ignore the voices of the civil rights community.

Craig Gurian
Executive Director
Anti-Discrimination Center
“One Community - No Exclusion”

The problem I see with a disparate impact doctrine is that it’s literally circumstantial evidence in an argument of intent.

Maybe I don’t know what I’m talking about, since I’m not a lawyer, real estate agent, or minority, but it seems like you’d need to temper disparate impact with consumer intent for it to be a useful measurement.  That is, it shouldn’t be enough to say that policies are keeping black families on “the wrong side of the tracks.”  To be meaningful, you’d need to show this plus show that a significant number of those families have the desire and means to live elsewhere.

If a group is injured, the problem needs to be solved, but the solution shouldn’t come at the expense of people who didn’t intend harm, when there are surely people who do intend harm and use the law to their benefit.

Daniel Lauber

Feb. 8, 2013, 12:26 p.m.

Only the radical right could make—with a straight face—the disingenuous arguments against allowing disparate impact analysis in discrimination cases. Those who engage in illegal discrimination have gotten more sophisticated over the years. While they will sometimes reveal their intent verbally, they usually just use a wink and a nod to hide the discriminatory purposes of their acts. There is nothing in the Fair Housing Act, for example, that limits discrimination solely to instances where you can show intent. The federal circuits are unanimous that showing a different impact on different protected classes is a valid way to prove illegal discrimination. But the GOP and the radical right (okay, maybe that is redundant) are intent on eviscerating all anti-discrimination statutes—and eliminating disparate impact analysis is an incredibly effective way to issue a license to discriminate at will once again. Be afraid, be very afraid.

Nikole Hannah-Jones

Feb. 8, 2013, 12:49 p.m.

Hi John. Thank you for your comment. One thing that should be made clear is that one cannot simply prove a violation of the Fair Housing Act by showing disparate results. If the accused business or landlord can show a legitimate business practice that explains the results, the disparate impact claim fails. But if they can’t justify the policy, for instance, by showing the legitimate business practice that explains why black and Latino borrowers got worse loans than similarly qualified white borrowers, than that can be a problem.

Nikole, the problem though is that a business could be forced into a quota-like system to cover themsevles. Take the Countrywide example. It turn it into a “prove your innocense” model instead of having to prove guilt. Yeah, maybe there were discriminating, but if that is the case, on such a large level, even a verbal or wink-nod system cannot be kept under wraps. Too many people involved. And often the reason is not business but simply social. There is no business reason why NBA teams are typically African-American and NHL teams are mostly white. There are, however, many social reasons behind this. Disparate Results should definitely be introducable as a pattern but it should not require proof of non-discrimnation by the accused.

Nikole Hannah-Jones

Feb. 8, 2013, 2:12 p.m.

Mark: What are the social arguments (defenses) for charging black and Latino homebuyers more for a loan than a white borrower with the same credit and income profile?

Mark: Can’t understand the purpose of your attempted analogy of NBA plus NHL racial groupings. What does that have to do with loan terms which strongly indicate those applying get different rates or get denied even though they share the same credit and income histories? What would lead to a quota system when all loan companies really need to do is use the same criteria for all applicants?

I’d love to read the article and many others. However, bleep, bleep, bleep, is anyone besides finding that printing the articles no longer works. The line does not wrap within the page width, so every line is missing some words. Makes it impossible to print a readable copy. I’ve tried every adjustment I can think of, including a different printer. Help!

Guilty until proven innocent.
All practically any landlord wants is a good tenant. One who pays the rent and does not destroy property. All any lender wants is someone who repays the loan timely. 
This article does not report that many of the landlords in this area are also minorities. So is it them being bias against their own race or is it a landlord seeking a responsible tenant? Or a landlord seeking a return on their investment and protection of their property And do we only prosecute caucasian landlords. This article implies only white landlords or lenders can be guilty of this,
in the same way the author reports of winks and nods.
This administration will legislate to the point that only the government
( taxpayers) can afford to be landlords.  Once again the dwindling hard working taxpaying portion of the population will be saddled with more burden for those who are on the taxpayer dole.

Daniel Lauber

Feb. 9, 2013, 1:29 p.m.

Sadly, and in all candor, you don’t know what you’re writing about. Disparate impact analysis is a legal concept for identifying illegal discrimination due to practices that have an adverse effect on a protected class. It has nothing to do with the scenarios you pose. I have never heard of disparate impact analysis being used to prove discrimination against a landlord for refusing to rent to a tenant in a protected class. The landlord’s own actions are enough to reveal discriminatory action.

Disparate impact analysis has been used largely evaluate the impact of laws and practices that a government has adopted that may exclude a members of a protected class from living in the community—such as exclusionary zoning practices. It has been used to show how a city’s zoning ordinance illegally discriminates against people with disabilities who need to live in a group home. Discriminators have gotten pretty sophisticated and now avoid making the public statements that reveal their discriminatory intent. So the courts look at the effect of their actions on the protected class at issue to identify if these actions result in discrimination against the protected class. It’s a legitimate tool that all 11 federal circuits have long accepted. The only reason the Supreme Court took this case was to give its right-wing radical majority an opportunity to further eviscerate fair housing law.

willie Jackson

Feb. 9, 2013, 9:54 p.m.

I look forward to the day that a person is not asked the color of his skin but asked how has he served his fellow man thus revealing his character—to paraphrase ML King

The Federal Government always asked your race thus one of the most racist institution in existance today

Daniel Lauber

Feb. 10, 2013, 4:59 p.m.

Mr. Jackson,
I too look forward to that day, but it won’t arrive during our lifetimes. Meanwhile, the well-documented ongoing discrimination in housing against African Americans, women, families with children, people with disabilities, Latinos, members of non-Christian religions, veterans, etc. has got to end. That won’t come about on its own—which is why we need a strong Fair Housing Act that can actually be enforced.

Your statement about the federal government, however, is uncalled for and incredibly false—the sort of Big Lie the Fox News has repeated endlessly. Data on race, ethnicity, and other characteristics is crucial for identifying and addressing our nation’s domestic issues. Without it, we’d be operating in a vacuum. That’s why the Census Bureau asks for that information in the Census and American Community Survey. That’s why that information is gathered when applying for a mortgage—because as I’ve seen all over the country, lenders steer African Americans (and to a lesser, but still substantial extent, Latinos) to high cost, predatory loans or reject their applications while giving equally qualified white applicants loans. It’s all there to see in the Home Mortgage Disclosure Act data released each September. Of course the radical right doesn’t want this data collected—because ignorance of the facts is their mantra and the basis of their ideology.

Nikole Hannah-Jones

Feb. 11, 2013, 10:55 a.m.

Hi Shay. To address your question, the Fair Housing Act covers everyone. It is illegal for a white landlord to discriminate against a black tenant and a black landlord to discriminate against a white tenant.

Everyone is covered by the Fair Housing Act. It covers race, color, gender, religion, national origin, the disabled, and families with children.

In fact, disparate impact has been used to address bank policies that discriminate against women, etc.

Here is a link to the act:

willie Jackson

Feb. 11, 2013, 12:25 p.m.

Mr. Lauber,
You are mistaken because you assume that humans are different due to skin color—no the Federal Government wants to perpetuate racism to make money and retain power by dividing the population into racial groups. Again Mr. Lauber your propublica is an example of a racists
organization that would go out of existance without the assumtion that humans are different due to skin color. Humans are different due to their character

Daniel Lauber

Feb. 11, 2013, 1:40 p.m.

Yes, Mr. Jackson, you are right that people are different due to their character, not their skin color. And that’s exactly what the Fair Housing Act addresses. The problem remains that far too many people refuse to sell or rent to somebody due to their skin color, race, national origin, familial status, disabilities, or religion. The whole purpose of the Fair Housing Act and civil rights laws is to put an end to that kind of discrimination. If landlords, real estate agents, lenders, etc, would only treat people solely based on their character and not their color, then there would be no need for the Fair Housing Act. But that is day isn’t here yet and given that the Republican Party continues to build itself on its appeals to racial bigotry, that day will not arrive in our life times.

Willie Jackson

Feb. 11, 2013, 8:03 p.m.

Mr. Lauber,  I agree that those who make their living from racial bigotry are alive and well in Fed. government and NAACP BET etc. Some administer the now antiquated Republican civil right laws etc. of the 60’s that corrected the racial government laws of the states.
Happily the Supreme Court sees that racism now exists mainly with those who make their living from these reverse discrimination laws and will hopefully strike them down allowing all to live according to their skills in serving their fellowman

Neil C Denver

Feb. 11, 2013, 9:08 p.m.

The basic housing problem that Blacks have is that their high school graduation rates are only 61.5%.  Hispanics are not far ahead with a high school graduation rate of 63.5%

If Obama wants to socialize the banking industry, let him try.  The Blacks that I know are proud of their heritage but also proud that their parents worked on their reading skills long before then entered kindergarten.  They also encouraged all-around school activities including sports and music.  But they understood at an early age that with proper attention to education, they had virtually no limits except for hard work coupled with native intelligence.

And spelling correctly is a necessity.  For goodness sake get a 5 letter word correct.

Nikole, I did (basically) understand the difference, but my point—unformed as it probably was—was that the doctrine as used today sounds like a “guilty until proven innocent” scenario.  And I see that as easy to abuse.

It seems like the onus should be on the prosecutor, regulator, or activist to show that the business wouldn’t change if race weren’t an issue, not the business owner to show that blacks and Hispanics are some sort of burden.

I would think that would be easier, as well, and far more comfortable for everybody.  Imagine, for example, a landlord who has a legitimate business issue with a local ethnic group.  I can’t envision one, but I hope we can all assume it for the sake of the argument.  Having to explain that issue publicly brands that person permanently as a racist.

By contrast, making the case that local minority families can afford the rent and don’t have a history of crime should be trivial and doesn’t harm anybody.

Again, I’m just feeling out the idea, but as I do, it seems off as a legal doctrine.

Mr. Jackson, I agree with you in principle, but it’s worth pointing out that “reverse discrimination” is really only a problem when there’s no…“forward discrimination” (?), I guess.  Blacks taking a stand for their rights is progress.  Whites, already being largely in power, taking a stand for our rights is oppression.

It’s true that the government uses racial issues to pit us all against each other, but just because even a majority of us realize that a person isn’t good or evil, smart or dumb, ambitious or lazy, based on where his ancestors decided to settle after leaving the savannah, it doesn’t follow that we’ve fixed the problem of harmful discrimination.

And if that’s not solved, then we’re all harmed by the economic inefficiency, the lack of connectivity and ability to combine ideas, and the fact that people are being hurt while we stand by.

John: Under the Fair Housing Act, there is no “legitimate” business issue a landlord can have against an entire ethnic or racial group. That is illegal. And it should not be anyone’s job to prove that minority families specifically can afford rent or don’t have criminal histories.

All the Fair Housing Act seeks to ensure is that people are treated the same regardless of their race—it mandates that a tenant’s worthiness be based on his or her individual assets not on membership to any particular ethnic group. Whether someone has the income to afford an apartment or a criminal background has nothing to do with that person’s race or ethnicity.

Vilos Cohaagen

Feb. 23, 2013, 2:47 p.m.

Hard to believe that someone who wants Housin’ would not be welcomed into a new neighborhood with open arms.

This article is part of an ongoing investigation:
Segregation Now

Segregation Now: Investigating America's Racial Divide

Investigating America’s racial divide in education, housing and beyond.

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