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SCOTUS to Hear Fair Housing Discrimination Case From Texas

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By Mark Wilson, Esq. on October 07, 2014 2:39 PM

Last week, the Supreme Court granted certiorari to Texas Department of Housing and Community Affairs v. The Inclusive Communities Project Inc.

The grant was limited to the first question presented -- i.e., whether disparate impact claims are cognizable under the Fair Housing Act (FHA). (Of course, this requires another inevitable question: "What's the standard for such claims?")

SCOTUS Week at FindLaw

Prepare for Acronyms

The Texas Department of Housing and Community Affairs (TDHCA) makes tax credits available to developers who want to construct low-income housing under a program administered by the Department of Housing and Urban Development (HUD). Inclusive Communities Project (ICP) sued on the ground that TDHCA's grant of tax credits was disproportionately granted in predominantly minority neighborhoods -- and had the numbers to back it up. Between 1999 and 2008, TDHCA gave tax credits to 49.7 percent of units in areas where less than 10 percent of the population was white, but only 37.4 percent of units areas where the population was at least 90 percent white. This isn't a white people problem; it's a lack of diverse communities problem, as segregation is occurring in the sense that TDHCA is indirectly supporting the creation of unintegrated neighborhoods separated by race.

The sole question for the Fifth Circuit was whether ICP proved an FHA claim based on disparate impact. Because no standard existed in the Fifth Circuit, the court made one up: It adopted a two-step burden shifting approach in which the plaintiff must first prove a discriminatory effect, the burden shifts to the defendant to show substantial and legitimate nondiscriminatory interests, and then the plaintiff must show that those interests "could be served by another practice that has a less discriminatory effect." (OK, this isn't so much "made up" as taken from other circuits' FHA disparate impact tests.)

Not an Isolated Problem

Notably, the Supreme Court was called on twice in the past to decide whether disparate impact claims could be brought under the FHA, but those cases settled before the Court heard them. The petitioners in this case want the Court to determine, once and for all, what the standard is for proving disparate impact discrimination.

The Court probably took the case because Texas isn't alone: According to the petition, nine courts of appeals have made rulings in FHA disparate impact claims in the last two years.

Or Is This an Administrative Agency Problem?

During the pendency of the case at the district court level, HUD adopted regulations for determining FHA disparate impact discrimination. These regulations adopted a burden-shifting approach, but one that was different from the Fifth Circuit's (which, in turn, was modeled on the Second Circuit's).

By framing the issue as one of whether HUD's disparate impact standard was correct, the question becomes one not of constitutional character, but of an agency promulgating regulations, which are reviewed under a much more deferential standard.

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