The Business Implications of Disparate Impact’s Uncertain Future

By Conor Arpey

As the Trump administration continues implementing its conservative agenda, the Department of Housing and Urban Development (HUD) and the Department of Justice (DoJ) may modify the landscape of Fair Housing Act (FHA) compliance for real estate professionals and fair housing advocates.[1] Charged with enforcing the FHA’s prohibition on housing discrimination based on race, religion, gender, or national origin, these agencies may alter the government’s approach to prosecuting housing discrimination cases.[2]

Crucially, both HUD Secretary Ben Carson and Attorney General Jeff Sessions are forceful critics of a litigation tactic used in housing discrimination cases, called disparate impact.[3] Consequently, HUD and DoJ are likely amenable to implementing policies to prohibit government lawyers from using this litigation tactic. This possible change presents an important legal issue because disparate impact is the primary method for prosecuting housing discrimination cases.[4] If government lawyers are prohibited from using disparate impact, it would likely weaken FHA enforcement, which may pose some opportunities and risks for those involved in the real estate industry.

At its core, disparate impact is an effects-based approach for demonstrating how a practice or law disproportionately burdens a protected class of individuals.[5] It allows a plaintiff or prosecutor to prove that a housing practice is discriminatory without strong evidence that the defendant intended to discriminate.[6] Instead, the evidentiary standard can largely be satisfied through statistical evidence showing that discrimination is in fact occurring.[7] As a result, disparate impact provides a convenient route for making a successful housing discrimination claim.[8]

If disparate impact is not an option, the party bringing the claim must prove that the defendant had the intent to discriminate.[9] Although discriminatory intent is provable in some extreme cases, landlords and lawmakers engaging in discriminatory housing practices are rarely disposed to openly state their prejudiced intentions in public.[10] Consequently, this alternative litigation avenue is a much more difficult evidentiary standard to satisfy, especially when the practice at issue is seemingly innocuous.[11] Therefore, if Carson and Sessions prohibit disparate impact and force government lawyers to only use an intent-based approach, it would dramatically decrease the number of housing discrimination claims the federal government brings against municipalities or private actors.[12]

A decrease in the number of housing discrimination claims would substantially impact the regulatory environment for real estate professionals. In such a situation, owners of large commercial real estate entities that are subject to the FHA’s prohibition on housing discrimination would likely have more flexibility in how they operate their business. More specifically, they would have more discretion over how they operate their residential holdings, including subdivisions and large apartment complexes. This change in FHA enforcement may also create greater uncertainty for real estate professionals and motivate private actors to more aggressively litigate potential FHA violations. However, it would largely benefit these businesses, because it would likely lower the monetary burden created by housing discrimination litigation.

Nonetheless, this potential upside for the real estate industry does not operate in a vacuum. Housing has an immense impact on the lives and wellbeing of individuals, and housing discrimination is still rampant in the United States.[13] Consequently, on a broad level, prohibiting government attorneys from using disparate impact would create a more permissive environment for blatant housing discrimination against marginalized communities. In terms of both practical legal consequences and symbolic messaging, a substantial decline in federal FHA enforcement would signal to commercial housing providers that they can get away with brazen acts of discrimination against marginalized communities.[14]

As a result, kinds of housing discrimination that now largely exists on a de facto basis would be perpetrated through openly prejudiced policies and practices. This shift would doubtlessly exasperate the ongoing moral crisis of housing segregation in American society, and unjustly impair the wellbeing and dignity of people protected under the FHA’s statutory provisions. While these circumstances would likely benefit some businesses, it would also come at a high cost in terms of human suffering and exploitation.



[1] Lyle Denniston, Opinion analysis: A civil rights law made broader, but not too broad, SCOTUSblog (June 25, 2015 12:22 pm)

[2] 42 U.S.C. § 3608(a).

[3] Jose A. DelReal, Ben Carson, outsider with no government experience, confirmed to lead HUD, Wash. Post (Mar. 2, 2017, 10:29 AM)

[4] Id.

[5] Disparate Impact, National Fair Housing Alliance, Jan. 15, 2015,

[6] Id.

[7] Id.

[8] Id.

[9] Construction and Application of § 804(f) of Fair Housing Act (42 U.S.C.A. § 3604(f)), 148 A.L.R. Fed. 1, *1 (2015).

[10] Id.

[11] Id.

[12] New Administration May Pivot on Fair Housing Priorities, N.M.H.C. (Dec. 15, 2016)

[13] Id.

[14] Id.

Leave a Reply

Your email address will not be published. Required fields are marked *