U.S. District Court Halts HUD’s Revisions to Disparate Impact Rule

A federal judge recently issued a preliminary injunction to stop HUD from implementing a rule that would have made it harder to bring discrimination claims under the Fair Housing Act. The rule would have required plaintiffs to meet a higher threshold to prove unintentional discrimination, known as disparate impact. The new rule, which is an update to the agency’s 2013 disparate impact rule, would also have given defendants more leeway to rebut the claims.

In the opinion, Judge Mark Mastroianni of the U.S. District Court for the District of Massachusetts wrote, “These significant alterations, which run the risk of effectively neutering disparate impact liability under the Fair Housing Act, appear inadequately justified.” In granting the preliminary nationwide injunction, the judge wrote that the Massachusetts Fair Housing Center and Housing Works, the plaintiffs, “have shown a substantial likelihood of success on the merits” of their claim that the new rule is “arbitrary and capricious” and violates the Administrative Procedure Act.

The court also agreed with the plaintiffs that the rule revisions pose a real and substantial threat of imminent harm to the Massachusetts Fair Housing Center’s mission by raising the burdens, costs, and effectiveness of disparate impact liability. The court also found that these harms are not recoverable if the 2020 rule is allowed to go into effect but was later vacated. The injunction means HUD will be unable to implement the new rule until the legal challenge is resolved.