March 20, 2023
HUD Restores 2013 Disparate Impact Rule
HUD has reinstated its 2013 Disparate Impact Rule, which focuses on unintentional discrimination in housing. Disparate impact theory creates liability for seemingly neutral policies that nonetheless have discriminatory effects on a protected class.
Industry Impact: The Rule’s reinstatement creates unnecessary uncertainty, undermines the use of necessary business practices, and imposes new obstacles to reducing housing costs and addressing the country’s housing supply shortage.
NMHC's Viewpoint: NMHC strongly supports fair housing laws, but we have long-raised concerns that an overly expansive view of disparate impact theory could create liability for basic business practices ranging from housing development to operations. This Rule fails to acknowledge the limitations of disparate impact liability imposed by courts subsequent to the development of the 2013 Rule – namely the Supreme Court’s Inclusive Communities case, which established important guardrails around disparate impact theory.
What’s Next: NMHC will continue to urge HUD to align its rule with Supreme Court and other legal action and implement a rule that aids housing providers in executing long-held business practices without running afoul of fair housing requirements.