Supreme Court upholds disparate impact

by Ryan Smith25 Jun 2015
The Supreme Court ruled today that the doctrine of disparate impact can continue to be used to challenge discriminatory outcomes under the Fair Housing Act, even if there was no intent to discriminate.

The court ruled 5-4 in favor of the doctrine in Texas Department of Housing and Community Affairs v. The Inclusive Communities Project. The case arose from a disparate impact claim filed by the ICP, a Texas nonprofit that promotes racially and economically diverse co0mmunities. The ICP claimed that between 1995 and 2009, the TDHCA had allocated almost all affordable-housing tax credits to developments in poorer minority neighborhoods and denying credits to those in wealthier white neighborhoods, according to a Huffington Post report.

The ICP argued that this policy preserved racial segregation by preventing low-income minority residents from moving into white communities. Under the disparate impact doctrine, the TDHCA has to prove that its allocation of credits served a nondiscriminatory business interest that couldn’t be achieved by less discriminatory means. While the agency proved a legitimate business interest, it couldn’t prove it was pursuing that interest in the least discriminatory manner possible, according to the Huffington Post.

Critics of disparate impact argue that it unfairly punishes private-sector businesses by punishing them for essentially neutral practices, and makes them vulnerable to lawsuits in which the burden of proof is almost entirely on the defendant. Supporters of the doctrine, however, say that housing policies that disproportionately affect minorities may still be found legal as long as they can meet HUD criteria, the Huffington Post reported.


Should CFPB have more supervision over credit agencies?