Now that the U.S. Supreme Court has heard arguments both for and against the controversial "disparate impact" rule in housing, stakeholders on both sides are awaiting the Court's decision as to whether or not disparate impact claims can be made under the Fair Housing Act.
The rule allowing disparate impact claims, which are allegations made based on neutral practices that may have a discriminatory effect, was passed by the Obama Administration in February 2013. Opponents of disparate impact claims won a victory in early November when U.S. District Judge Richard Leon struck down the rule, saying that only claims of direct, intentional discrimination could be made under the Fair Housing Act.
On Wednesday morning, the Supreme Court heard arguments in the case of Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, Inc. for about an hour. The case centers on allegations that tax credits were awarded to real estate developers who own property in low-income minority dominated neighborhoods and denied to developers who own property in predominantly white neighborhoods.
Despite the rule being struck down by a federal district court in November, Supreme Court Justice Antonin Scalia, the longest current-serving justice on the Court at nearly 29 years, pointed to the number of appeals courts that have allowed disparate impact claims in the last four decades. He seemed to doubt the case presented against disparate impact by Texas Solicitor General Scott Keller and suggested that Congress would not have amended the Fair Housing Act in 1988 if "disparate impact" did not exist.
"It has to construe that the plain text of the law, and the law consists not just of what Congress did in 1968, but also what it did in '88," Scalia said. "And you look at the whole law and you say, what makes sense? And if you read those – those two provisions together, it seems to be an acknowledgement that there is such a thing as disparate impact."
Scalia's position regarding the existence of disparate impact surprised many observers, since he is known as one of the most conservative justices on the Court. Later in the exchange, however, Scalia seemed to be arguing in favor of the disparate impact rule's opponents when Michael Daniel, who represented the Inclusive Communities Project, suggested that racial disparity and racial discrimination were the same thing.
"No, no, no, no. Racial disparity is not racial discrimination," Scalia said. "The fact that the NFL is – is largely black players is not discrimination. Discrimination requires intentionally excluding people of a certain race."
For the most part during the argument presentation, the four justices considered conservative seemed to be questioning the validity of disparate impact claims, while the four liberal justices seemed to reveal that they believed disparate impact claims made under the Fair Housing Act had some merit. Justice Anthony Kennedy, a Reagan appointee who is generally conservative and is sometimes the swing vote, seemed to be skeptical of allowing government policy that forces groups to make race-based decisions as they would if disparate impact claims were allowed.
The U.S. Department of Housing and Urban Development (HUD) issued the following statement on Wednesday regarding the Supreme Court hearing disparate impact arguments:
"Today, the Supreme Court of the United States considered an important legal doctrine that is critical to HUD’s ability to enforce the Fair Housing Act and to protect the rights of those whose housing choices would otherwise be limited because of their race, color, religion, national origin, disability, sex, or because they have children. The landmark Fair Housing Act of 1968 prohibits housing discrimination and has been interpreted to prohibit housing practices that produce an unjustified discriminatory effect, regardless of whether there was any evidence of intent to discriminate. HUD's discriminatory effects rule did not create new law, rather formalized long-established agency practice and 40 years of judicial precedent from 11 appellate courts. We cannot turn back the clock in the progress we've made fighting housing discrimination. We now await the Court’s ruling."