Skip to main content

Nixon Peabody LLP

  • People
  • Capabilities
  • Insights
  • About
Trending Topics
    • People
    • Capabilities
    • Insights
    • About
    • Locations
    • Events
    • Careers
    • Alumni
    Practices

    View All

    • Affordable Housing
    • Community Development Finance
    • Corporate & Finance
    • Cybersecurity & Privacy
    • Entertainment & Media
    • Environmental
    • Franchising & Distribution
    • Government Investigations & White Collar Defense
    • Healthcare
    • Intellectual Property
    • International Services
    • Labor, Employment, and Benefits
    • Litigation
    • Private Wealth & Advisory
    • Project Finance
    • Public Finance
    • Real Estate
    • Regulatory & Government Relations
    Industries

    View All

    • Aviation
    • Cannabis
    • Consumer
    • Energy
    • Financial Services
    • Healthcare
    • Higher Education
    • Infrastructure
    • Manufacturing
    • Nonprofit Organizations
    • Real Estate
    • Sports & Stadiums
    • Technology
    Value-Added Services

    View All

    • Alternative Fee Arrangements

      Developing innovative pricing structures and alternative fee agreement models that deliver additional value for our clients.

    • Continuing Education

      Advancing professional knowledge and offering credits for attorneys, staff and other professionals.

    • Crisis Advisory

      Helping clients respond correctly when a crisis occurs.

    • DEI Strategic Services

      Providing our clients with legal, strategic, and practical advice to make transformational changes in their organizations.

    • eDiscovery

      Leveraging law and technology to deliver sound solutions.

    • Environmental, Social, and Governance (ESG)

      We help clients create positive return on investments in people, products, and the planet.

    • Global Services

      Delivering seamless service through partnerships across the globe.

    • Innovation

      Leveraging leading-edge technology to guide change and create seamless, collaborative experiences for clients and attorneys.

    • IPED

      Industry-leading conferences focused on affordable housing, tax credits, and more.

    • Legal Project Management

      Providing actionable information to support strategic decision-making.

    • Legally Green

      Teaming with clients to advance sustainable projects, mitigate the effects of climate change, and protect our planet.

    • Nixon Peabody Trust Company

      Offering a range of investment management and fiduciary services.

    • NP Capital Connector

      Bringing together companies and investors for tomorrow’s new deals.

    • NP Second Opinion

      Offering fresh insights on cases that are delayed, over budget, or off-target from the desired resolution.

    • NP Trial

      Courtroom-ready lawyers who can resolve disputes early on clients’ terms or prevail at trial before a judge or jury.

    • Social Impact

      Creating positive impact in our communities through increasing equity, access, and opportunity.

    • Women in Dealmaking

      We provide strategic counsel on complex corporate transactions and unite dynamic women in the dealmaking arena.

    1. Home
    2. Insights
    3. Articles
    4. HUD Releases Proposal to Overhaul Disparate Impact Rule

      Articles

    Article

    HUD Releases Proposal to Overhaul Disparate Impact Rule

    Aug 20, 2019

    LinkedInX (Twitter)EmailCopy URL

    By Harry KellyEsq.

    In the latest twist in its attempt to codify disparate impact law under the Fair Housing Act, HUD just announced an overhaul of its disparate impact regulation.

    In the latest twist in its ongoing attempt to codify the law concerning disparate impact claims under the Fair Housing Act (“FHAct”), HUD released an overhaul of its current disparate impact rule on August 19, 2019.  84 Fed. Reg. 42854 (Aug. 19, 2019)(the “Proposal”).  In a “disparate impact” claim, a public agency or private firm may be held liable for violating the FHAct based solely on the impact a challenged policy or practice has on one of the FHAct’s protected classes, even if the policy is neutral on its face and in the absence of any evidence of discriminatory intent.  To recap, HUD issued its current disparate impact rule (24 CFR §100.500) in 2013, likely as an attempt to establish a precedent for federal courts to follow in deciding a series of then-pending cases challenging the existence of disparate impact liability under the FHAct.  In 2015, the U.S. Supreme Court confirmed that disparate impact liability exists under the FHAct, but mandated a series of “safeguards” intended to prevent “abusive” disparate impact cases.  Texas Dept. of Hous. and Comm. Dev. v. The Inclusive Communities Project, Inc., 135 S.Ct. 2507 (2015).  Among other things, then-Justice Kennedy asserted that disparate impact should not be used to second-guess otherwise legitimate decisions of public agencies and private firms, should only be used to attack “arbitrary, artificial and unnecessary” barriers to housing, and requires a showing of “robust causality” between the challenged policy and the alleged discriminatory impact.

     

    Initially, HUD contended there was no daylight between its disparate impact regulation and the holding in Inclusive Communities.  Last year, however, HUD issued a notice soliciting comments on whether the existing regulation was in fact consistent with the Inclusive Communities.  The Proposal reflects HUD’s attempt to conform its disparate impact regulation to the Inclusive Communities decision.

     

    In many respects, the Proposal meets that goal, reflecting comments made by several national housing organizations.  Among other things, it incorporates many of the safeguards identified by the Supreme Court, including the “robust causality” and “arbitrary, artificial and unnecessary” standards.  In doing so, the Proposal shifts away from the original “burden-shifting” approach incorporated into the 2013 regulation, where the plaintiff had the initial duty to demonstrate a disparate impact on a protected class and then the burden would shift to the defendant to show that there was a “legally sufficient justification” for the rule.  Instead, the Proposal attempts to formalize the elements of a disparate impact claim that a plaintiff must establish, but retains some aspects of a burden-shifting approach, where at least some issues are assigned to the defendant.  The resulting hybrid is awkward in some respects and raises questions, such as whether it may create conflicts with the Federal Rules of Civil Procedure and if so, whether those conflicts may discourage Federal courts from adopting the revised rule as a uniform basis for deciding disparate impact cases, which is one of the chief advantages of a nation-wide Federal disparate impact rule in the first place. 

     

    HUD should be complemented for the concepts incorporated in the Proposal, as a first step towards harmonizing its disparate impact rule to the Inclusive Communities holding.  Additional modifications to the proposed rule and clarification of critical terms are still needed.  Comments are due no later than October 18, 2019.
    The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.

    Subscribe to stay informed of the latest legal news, alerts, and business trends.Subscribe

    • People
    • Capabilities
    • Insights
    • About
    • Locations
    • Events
    • Careers
    • Alumni
    • Cookie Preferences
    • Privacy Policy
    • Terms of Use
    • Accessibility Statement
    • Statement of Client Rights
    • Purchase Order Terms & Conditions
    • Nixon Peabody International LLC
    • PAL
    © 2025 Nixon Peabody. All rights reserved