Ye who are disappointed in the Supreme Court this term, take heart: Its plainly wrong decision in the housing case from Texas, handed down last week, was not as bad as it might have been.
“The underlying dispute” in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, wrote Justice Anthony Kennedy for a five-member majority that included the four judicial liberals, “concerns where housing for low-income persons should be constructed in Dallas, Texas—that is, whether the housing should be built in the inner city or in the suburbs.”
The federal government provides low-income housing tax credits. The Texas Department of Housing and Community Affairs distributes them to developers, thus affecting where low-income housing is built. The Inclusive Communities Project (ICP), a Dallas nonprofit that assists low-income families in finding affordable housing, sued the department, charging that its allocation of credits violated the antidiscrimination provisions of the Fair Housing Act of 1968 (FHA).
That statute plainly forbids the disparate treatment of individuals because of their race. But the Supreme Court before now had never ruled on whether the law also prohibits “disparate impact”—in which a practice neutral on its face and nondiscriminatory in its intent has a disproportionate effect, statistically discerned, on some racial or other protected group. To prevail, a defendant must then show some degree of “necessity” for the practice.
The case brought by the Dallas nonprofit alleged disparate impact, the claim being that the Texas housing department granted too many credits for housing in mainly black inner-city areas and too few in mainly white suburban neighborhoods. The question before the justices was whether the FHA authorizes disparate impact claims, and the Kennedy majority held that it does.
Justice Samuel Alito wrote the 35-page dissent, joined by Chief Justice John Roberts and Justices Antonin Scalia and Clarence Thomas. “The Fair Housing Act does not create disparate impact liability,” said Alito, “nor do this Court’s precedents.” Alito’s handling of the text of the statute (including the 1988 amendments) and his reading of the precedents were so compelling that Kennedy referred to Alito’s opinion as “well stated.” Perhaps Kennedy knew that Alito had the better argument.
But Kennedy’s opinion is not terrible. While he affirms the disparate impact approach currently taken by civil rights agencies and the lower courts, he doesn’t seek to expand it. Quite the opposite: He wants it to operate under certain limitations.
He writes that disparate impact liability “has always been properly limited in key respects that avoid the serious constitutional questions that might arise under the FHA, for instance, if such liability were imposed based solely on a showing of a statistical disparity.” Whether that is true or not—whether disparate impact has always been so limited—Kennedy is saying it should be.
Likewise, he writes, “Difficult questions might arise if disparate-impact liability under the FHA caused race to be used and considered in a pervasive and explicit manner to justify governmental or private actions that, in fact, tend to perpetuate race-based considerations rather than move beyond them.” Kennedy addresses the courts in particular, telling them to “avoid interpreting disparate impact liability to be so expansive as to inject racial considerations into every housing decision.” He adds that when courts do find liability, their remedial orders “must be consistent with the Constitution.”
And there’s more on this theme of limitations: Kennedy says that “if the specter of disparate-impact litigation causes private developers to no longer construct or renovate housing units for low-income individuals, then the FHA would have undermined its own purpose as well as the free-market system.” Moreover, governmental entities “must not be prevented”—by disparate impact claims—“from achieving legitimate objectives, such as ensuring compliance with health and safety codes.”
Texas Department of Housing v. ICP thus has settled the question of whether the FHA recognizes disparate impact. But not without directions by Justice Kennedy on how it must operate—within certain limits. The case has been remanded for further review, but the irony is that ICP could lose on the merits, as Kennedy all but predicts. “From the standpoint of determining advantage or disadvantage to racial minorities, it seems difficult to say as a general matter that a decision to build low-income housing in a blighted inner-city neighborhood instead of a suburb is discriminatory or vice versa.” For that reason, “this case on remand may be seen simply as an attempt to second-guess which of two reasonable approaches a housing authority should follow in the sound exercise of its discretion in allocating tax credits for low-income housing.”
We await the final chapter in this case, while observing that Congress is free to pass laws curtailing, if not ending, the dubious use of disparate impact in housing.
