HUD’s New Affirmative Furthering Fair Housing and Disparate Impact Rules

In September and October 2020, two new rules issued by the U.S. Department of Housing and Urban Development (HUD) went into effect. Both rules replace policies that had been adopted during the Obama administration.

Affirmatively Furthering Fair Housing Final Rule

On September 8, 2020, HUD’s new “Affirmatively Furthering Fair Housing” (AFFH) rule took effect. The new rule, formally called the “Preserving Community and Neighborhood Choice” rule, significantly decreases the fair housing obligations of state and local governments that receive HUD funding.

The 2020 AFFH rule replaces a rule adopted in 2015 that had required recipients of certain HUD funding to undertake an Assessment of Fair Housing (AFH) to examine racial and other disparities in their communities and then take “meaningful actions” to address at least some of these disparities.

Under the new rule, communities do not have to undertake such as Assessment. Further, the rule states that instead of having to show “meaningful action” to address segregation and other types of disparities, local and state governments must merely show that they took “some active step to promote fair housing.”

The 2020 AFFH final rule caps a multi-year process of decreasing the obligations of state and local governments to address impediments to fair housing. As HUD noted in its summary of the new rule, the Department had begun withdrawing data sources needed to produce the AFH in 2018. Then, HUD issued a proposed AFFH rule in January 2020, soliciting comments from the public and concerned stakeholders. Over 18,000 individuals and organizations submitted comments in response, with many civil rights and fair housing advocates expressing concern that the proposed rule would weaken enforcement of the AFFH requirement. Rather than continue with that process, however, HUD made a determination that the traditional “notice-and-comment [process of the Administrative Procedures Act] does not apply” and issued this new final rule.

HUD’s new AFFH rule has generated controversy, with a number of advocacy organizations and newspapers criticizing both the substance of the rule as well as the unusual procedures by which it was adopted.

Disparate Impact Final Rule

On October 26, 2020, HUD’s new “disparate impact” rule took effect. According to HUD, the new rule, which replaces HUD’s 2013 disparate impact rule, is intended to “better reflect the Supreme Court’s 2015 ruling in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc. and to provide clarification regarding the application of the standard to State laws governing the business of insurance.”

Under a disparate impact theory, a housing provider could be liable for practices that have an unjustified discriminatory effect, even though they were not motivated by a discriminatory intent. For example, statistics show that women are overwhelmingly the victims of domestic violence. Housing providers that deny housing to or evict survivors of domestic violence because of the domestic violence perpetrated against them may have a claim against the housing provider for unlawful sex discrimination in violation of the Fair Housing Act, even if the provider did not have a discriminatory intent to discriminate against women.

This new rule revises the burden-shifting test for determining whether a given practice has an unjustified discriminatory effect and adds to illustrations of discriminatory housing practices found in HUD’s Fair Housing Act regulations. This Final rule also establishes a new standard for determining when a housing policy or practice with a discriminatory effect violates the Fair Housing Act.

There are currently three federal lawsuits challenging the disparate impact final rule. On October 25, 2020, the U.S. District Court for the District of Massachusetts issued a stay and nationwide preliminary injunction against Secretary Ben Carson and the U.S. Department of Housing and Urban Development (HUD), halting HUD’s overhaul of the disparate impact protections of the Fair Housing Act. Click here to read more about the case.