October 13, 2020
The Honorable Benjamin S. Carson, Sr., M.D.
Secretary U.S. Department of Housing and Urban Development
451 7th Street SW Washington, DC 20410-0500
Re: HUD’s Disparate Impact Final Rule
To Whom It May Concern:
The Council of Large Public Housing Authorities (“CLPHA”) and Reno & Cavanaugh, PLLC (“Reno & Cavanaugh”) oppose the U.S. Department of Housing and Urban Development’s (“HUD’s”) Implementation of the Fair Housing Act’s Disparate Impact Standard Final Rule (the “Final Rule”). HUD’s continued failure to protect fair housing interests is alarming, albeit consistent given HUD’s recent Affirmatively Furthering Fair Housing Final Rule. The Disparate Impact Final Rule creates a heightened pleading standard for plaintiffs while simultaneously immunizing “practical” business interests such as profit from liability. We urge HUD to withdraw the Final Rule.
As we have previously submitted to HUD, we welcome changes to the disparate impact standard that provide specific protections for PHAs against frivolous fair housing lawsuits. We further welcome incorporation of specific reasonable defenses for PHAs to employ against disparate impact cases. It is therefore beyond disappointing that HUD did neither of these things in the Final Rule. Further, we are very concerned that while “HUD has determined a defense particularly for PHAs is not appropriate,” HUD has specifically designed the Final Rule to “benefit banks” and to respond to the Secretary of the Treasury’s “explicit[] recommend[ation] that HUD reconsider applications of the 2013 [Disparate Impact] Rule, especially in the context of the insurance industry.”
The Final Rule guts the previous burden shifting three-step process for proving disparate impact discrimination in favor of defendants. Rather than require that defendants “prov[e] that the challenged practice is necessary to achieve one or more substantial, legitimate, nondiscriminatory interest,” defendants now simply must show that “the challenged policy or practice advances a valid interest” and HUD has specifically stated that “[p]rofit is necessarily a valid interest for businesses.” Simply put, it appears to be HUD’s position that pursuit of profit excuses housing discrimination. This is directly contrary to the Fair Housing Act and to the mission of both HUD and PHAs to provide decent, safe, and affordable housing to our communities. HUD must withdraw the Final Rule.
Further, purportedly in response to criticisms that the Proposed Rule immunized the use of algorithms, HUD has elected to include the use of predictive models as a defense against disparate impact liability instead. Regardless of what HUD calls it, algorithms or predictive models, these systems echo historic redlining efforts that have concentrated poverty and perpetuated segregation in this country. HUD states in the Final Rule that “HUD believes that segregation may be the harmful unlawful result of a policy or practice that violates the disparate impact standard.” This statement rings hollow given the Final Rule’s predictive model and profit defenses.
The Final Rule threatens to overturn the progress that has been made to eliminate redlining and curb other facially neutral practices that nevertheless have a discriminatory impact on our communities. CLPHA’s members are committed to ending segregation, to ending housing discrimination, and to providing housing in areas of opportunity. The history of fair housing and the continued racial disparities in this country require withdrawal and rescission of the Final Rule.
Sincerely,
Sunia Zaterman
Executive Director Member
Council of Large Public Housing Authorities
Stephen I. Holmquist
Reno & Cavanaugh, PLLC