On June 25, 2021, the U.S. Department of Housing and Urban Development (HUD) issued a Notice of Proposed Rules (NPRM) on the Federal Register, proposing to repeal a 2020 HUD rule that expanded the requirements for the use of discriminatory effects, also known as “disparate impact,” to determine whether discrimination prohibited by the Fair Housing Act (FTA) has occurred.1 The NPRM also proposes: reinstate a rule on discriminatory effects adopted by the HUD in 2013, formalizing the application of discriminatory effects when assessing potential discrimination. While it has a long history, discriminatory effects, or different effects, the weight given to the analysis has varied over the years, and the return of the 2013 rule suggests increased support for the test, which can detect discriminatory behavior even in the absence of evidence of intentional discrimination. As a result, organizations may need to pay more attention to the impact of their policies than they did under the previous administration. The concept of practical significance for adverse effects was first introduced in Section 4D of the Uniform Guidelines[13], which states that “minor differences in selection rates may nevertheless constitute adverse effects if they are both statistically and practically significant … Several Federal Court decisions have used practical tests of significance of adverse effects to assess the “practicality” or “stability” of results. This is usually done by assessing the change in tests of statistical significance after hypothetically changing the selection status of members of the focal group from “fail” to “pass” (see, for example, Contreras v. City of Los Angeles (656 F.2d 1267, 9th Cir. 1981); U.S. v. Commonwealth of Virginia (569 F.2d 1300, 4th Cir. 1978); and Waisome v. Port Authority (948 F.2d 1370, 1376, 2d Cir. 1991)).
Court decisions show that agencies are particularly skeptical of “subjective justifications” and should conduct thorough investigations and analyze the facts to determine whether these justifications are supported by sufficient evidence. See, for example, Sandoval v. Hagan, 197 F.3d 484, 490–91 (11th Cir. 1999), revised subnomically for other reasons. Alexander v. Sandoval, 532 U.S. 275 (2001). In the Sandoval case, the Eleventh Judicial District upheld the District Court`s finding that none of the facts supported the recipient authority`s reasoning for limiting driving tests to English-speaking persons. The state agency offered several justifications for the rule in English only: road safety concerns, exam administration difficulties, audit integrity, and budget constraints. Id.
The District Court found that the addressee had not presented any evidence at trial indicating that non-English speakers posed a greater risk to road safety than English speakers; the recipient had undermined its own safety argument by recognizing valid licences issued by non-English speakers from other countries; the creation of test facilities for illiterate, deaf and disabled drivers; and after having previously proposed the examination in fourteen languages without administrative difficulties. The Tribunal also noted that cost was not a real factor in the decision to conduct the review in English only and that the recipient could afford the cost of language support given its $50 million budget. The Eleventh District Court upheld the District Court`s decision, finding that the reasoning of the State authority constituted a pretext for politics, despite the different effects they had found on minorities of national origin. The HUD received comments generally supportive of the proposed rule. HUD also received comments supporting the proposed rule, but wrote that HUD could further revise the proposed rule to align with inclusive communities. Commentators explained that the proposed rule would improve access to fair and affordable housing. One commentator suggested that the proposed rule, if implemented, would bring HUD closer to creating better communities. Commentators have also stated that the proposed rule is effective in detecting discrimination and ensuring that cases with different effects can be brought while complying with the law. Commenters explained that the proposed rule would specifically encourage the parties of Start Printed Page 60291 to work together and could reduce frivolous and arbitrary claims without creating a material burden for those with legitimate claims.
These factors can increase the complexity of analyzing adversity and harm.