Last winter President Obama’s Department of Housing and Urban Development published a regulation pursuant to the Fair Housing Act that defines discrimination as actions or policies that while neutral and nondiscriminatory in their intent have a disparate impact, shown through statistics, on a group of persons defined in terms of race (and other protected groups).
The legality of the new rule was challenged almost a year ago by two of the largest among the trade associations representing homeowner’s insurers, the pith of their argument being that in passing the Fair Housing Act Congress defined discrimination as disparate treatment—the different treatment of individuals on account of race—and not as disparate impact. The agency thus lacked the authority to make the new rule. As the Supreme Court has said, in a passage we quoted in our editorial on the case, “An agency literally has no power to act . . . unless and until Congress confers power upon it.”
Now the district judge in the case, Richard Leon, has issued his opinion, an unequivocal rejection of the new rule: “another example of an Administrative Agency trying desperately to write into law that which Congress never intended to sanction.” The bottom line: “The FHA prohibits disparate treatment only, and the defendants, therefore, exceeded their [legal] authority.”
Disparate impact is a theory of discrimination at the heart of the administration’s civil rights enforcement efforts. The administration has indeed been desperately trying–to borrow the judge’s apt words–to keep the Supreme Court from deciding whether the FHA recognizes disparate impact liability. Cases the Court has actually taken for review of this question have been withdrawn, as Judge Leon observes. The Court has just accepted a new case raising the question, and Leon is optimistic: “The Supreme Court is now perfectly positioned in Texas Department of Housing to finally address this issue in the not-too-distant future.” Meaning by the end of the current term, in late June.
