The Biden administration plans to reinstate a 2013 rule that codified a decades-old legal standard known as “disparate impact” as well as a 2015 rule requiring communities to identify and dismantle barriers to racial integration or risk losing federal funds, according to notices posted Tuesday by the Office of Management and Budget signaling that the rules have been accepted for review.
The two rules are integral to the enforcement of decades-old fair-housing law barring discrimination based on race, color, national origin, religion, sex, familial status and disability that has far-reaching impact, say civil rights attorneys. Housing is central to the Biden’s administration efforts to address racial inequity, which includes boosting Black homeownership and increasing rental housing in neighborhoods with more educational and economic opportunities, because where one lives is closely tied to schooling, employment, health and wealth.
“So much of wealth inequality has its basis in housing discrimination and the country’s failure to address fair access to housing,” said Dennis Parker, executive director of the National Center for Law and Economic Justice. “These are issues that really have a long-term intergenerational effect.”
The OMB notices, the first official sign that the process to rescind Trump regulations in favor of Obama-era rules has been set in motion, reveal few details of how the Biden administration plans to go about making the changes. The OMB received drafts of the rules Monday and posted their statuses early Tuesday. The reinstatement of HUD’s discriminatory effects standard known as disparate impact is a proposed rule. The effort to restore the Affirmatively Furthering Fair Housing requirement that communities remove barriers to racial integration is in an interim final stage.
The rules’ substance will be made public within 90 days once they have been reviewed internally and published in the Federal Register. Until then, Fudge and other agency officials are barred from commenting, said HUD spokeswoman Meaghan Lynch.
The 2013 disparate impact rule was aimed at making the housing industry justify criminal-background policies that are overly restrictive, the use of artificial intelligence to predict creditworthiness and other practices that, while seemingly race-neutral, have an adverse effect on Black and Latino Americans.
While conservatives argue that this approach unfairly ties the hands of businesses, civil rights attorneys say that applying the disparate impact standard has helped reduce inequality.
Michelle Aronowitz, a former HUD fair housing attorney under President Barack Obama who helped develop the disparate impact regulation, said the rule forces lenders, insurers, governments and others covered by the 1968 Fair Housing Act to analyze their policies and eliminate those that disproportionately hurt certain groups without justification.
“This is one of the most important tools that there is to address systemic racism in housing,” said Aronowitz, now a civil rights attorney in New York City. “You really need to look at the effects of government and corporate policies — not just what is meant or intended, but what the impact is. That’s fundamentally what this doctrine does. You shouldn’t be able to enact or maintain policies that lead to disparate outcomes based on unexamined assumptions or unnecessary conventions.”
Republicans have also expressed concerns about Fudge’s previously stated intent to undo regulations put in place under Trump to address what conservatives view as costly and time-consuming requirements to “affirmatively further fair housing” that they said discouraged the construction of much-needed affordable housing.
The Trump administration, in repealing the 2015 rule, had argued that requiring communities to draft plans to desegregate was too burdensome, used up too many federal resources and smacked of “social engineering.”
Lisa Rice, president and chief executive of the National Fair Housing Alliance, said both rules are essential to the Biden administration’s mission to advance racial equity but characterized these expected early steps as the bare minimum.
“The president has drawn a line in the sand and stated he wants to achieve racial equity. He cannot do that without disparate impact,” Rice said. “Disparate impact is not only critical for the housing and lending sectors but also anything else he wants to do in terms of education, transportation, health or voting rights.”
Rice said she is working with the Biden administration to ensure that the president’s jobs and infrastructure plan, which would include $213 billion for housing programs, is centered on racial equity. She said the bill must contain a provision that requires every dollar spent to be implemented through an “affirmatively furthering fair housing” framework to foster equitable housing, lending and other opportunities and reverse long-standing patterns of discrimination.
“When you think about it, it was those infrastructure bills that helped to create systemic segregation and a deeply inequitable society,” Rice said. A 1949 law gave cities wide latitude to declare eminent domain and raze Black-owned homes and businesses across the country in the name of urban renewal, she said; subsequent transportation bills creating the federal highway system connected suburban White communities to economic centers while bypassing and isolating communities of color.
“The Biden administration cannot repeat that playbook,” Rice said.
HUD last year received more than 7,700 complaints alleging discrimination, according to the agency. The highest number of complaints pertained to housing discrimination on the basis of disability and race. The agency said it also received many complaints alleging lending discrimination as well as unfair treatment of female tenants facing sexual harassment.
In recent video remarks commemorating Fair Housing Month and the 53rd anniversary of the Fair Housing Act, the last major piece of legislation of the civil rights movement, Fudge stated that “the purpose of the law is to bring an end to discrimination in housing and to eliminate the patterns of racial and ethnic segregation and economic disparities that have long existed in our neighborhoods and communities.”
“We are focused on putting fair housing and civil rights back at the forefront of HUD’s mission,” she said.