Unintentional discrimination, known as “disparate impact,” would become harder — if not impossible — to prove under the Trump administration’s proposal.
“The Trump administration is basically saying you have to prove your discrimination case when you file it,” said Lisa Rice, president and chief executive of the National Fair Housing Alliance, which has used disparate impact to successfully challenge discriminatory zoning ordinances and insurance policies. “They have elevated the bar so high that it is virtually insurmountable.”
The rule, she said, would allow for covert discriminatory practices by financial institutions, insurance companies and housing providers against groups protected by federal housing law: racial minorities, women, immigrants, families with children, LGBTQ people, people of faith and people with disabilities.
The proposed rule would require plaintiffs to meet a new five-pronged standard that includes showing how a policy or practice actually results in a disparity, demonstrating a harmful impact on members of a protected class, and showing not only that a statistical disparity exists but that it is directly caused by a specific policy or practice and not just attributable to chance.
“Under the current regime, if there is a statistical disparity, the burden shifts to the defendant to justify the criteria used to show there was nothing else they could have done that suited their purposes,” HUD general counsel J. Paul Compton Jr. said in a conference call with reporters. Under the new rule, “the burden will be on the plaintiff to show these were artificial requirements that really weren’t needed.”
In 2015, the Supreme Court established that disparate impact can be deemed discriminatory under the Fair Housing Act, even if there was no explicit intent to discriminate. But some conservatives view such policies as an attack on free markets.
HUD Secretary Ben Carson, in an op-ed in the Washington Times that year, argued that such “government-engineered attempts to legislate racial equality create consequences that often make matters worse.”
Carson said on Friday that the proposed rule “permits businesses and local governments to make valid policy choices.”
The Trump administration has been making similar moves in other government agencies. The Washington Post reported earlier this year that senior civil rights officials were told to look into ways to change existing “disparate impact” regulations and gauge what the impact might be.
HUD officials noted that the rule would not affect how the agency investigates cases of intentional housing discrimination and that the agency issued the proposed rule to more closely align with the Supreme Court ruling.
“The disparate-impact concept is a nebulous, complex doctrine,” Compton said. “Statistical disparity is not enough to establish liability.”
The new rule would free up businesses to “innovate and take risks without the fear they will be second-guessed through statistics down the line,” Compton said.
In addition, the proposed rule would provide companies using algorithmic models to assess factors such as risk or creditworthiness with new defenses to protect themselves against allegations of discrimination. Companies can show that their use of the algorithmic model is standard industry practice and that it is the responsibility of a third party. Companies could also enlist an expert to vouch that the algorithm is not the cause of a disparate impact.
“Now HUD is saying we don’t care if there’s a less-discriminatory model out there,” Rice said. “If the model is from a third party and is used as intended, we will not assign any blame to the defendant.”
The proposed rule is the Trump administration’s latest move to weaken civil rights protections, fair-housing advocates say.
He has also departed from the practices of recent Democratic and Republican predecessors who used their secretarial power to root out systemic racial discrimination by launching broad investigations into potential bias by banks, real estate companies and others.