33590 Federal Register / Vol. 86, No. 120 / Friday, June 25, 2021 / Proposed Rules 

1 42 U.S.C. 3601–3619, 3631. This preamble uses 

the term ‘‘disability’’ to refer to what the Act and 

its implementing regulations term a ‘‘handicap’’ 

because that is the preferred term. See, e.g., Hunt 

Procedures’’, prior to any FAA final 

regulatory action. 

Lists of Subjects in 14 CFR Part 71 

Airspace, Incorporation by reference, 

Navigation (air). 

The Proposed Amendment 

In consideration of the foregoing, the 

Federal Aviation Administration 

proposes to amend 14 CFR part 71 as 

follows: 

PART 71—DESIGNATION OF CLASS A, 

B, C, D, AND E AIRSPACE AREAS; AIR 

TRAFFIC SERVICE ROUTES; AND 

REPORTING POINTS 

■ 1. The authority citation for part 71 

continues to read as follows: 

Authority: 49 U.S.C. 106(f), 106(g); 40103, 

40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 

1959–1963 Comp., p. 389. 

§ 71.1 [Amended] 

■ 2. The incorporation by reference in 

14 CFR 71.1 of Federal Aviation 

Administration Order 7400.11E, 

Airspace Designations and Reporting 

Points, dated July 21, 2020, and 

effective September 15, 2020, is 

amended as follows: 

Paragraph 6005 Class E Airspace Areas 

Extending Upward From 700 Feet or More 

Above the Surface of the Earth. 

* * * * * 

ASO AL E5 Tuscaloosa, AL [Amend] 

Tuscaloosa National Airport, AL 

(Lat. 33°13′14′′ N, long. 87°36′41′′ W) 

That airspace extending upward from 700 

feet above the surface within a 9.4-mile 

radius of Tuscaloosa National Airport and 

within 4.0 miles each side of the 117° bearing 

from the airport extending from the 9.4-mile 

radius to 11.8 miles southeast of the airport 

and within 2.0 miles each side of the of the 

041° bearing extending from the 9.4-mile 

radius to 11.5 miles northeast of the airport 

and within 4.0 miles each side of the 296° 

bearing extending from the 9.4-mile radius to 

10.8 miles northwest of the airport and 

within 2.0 miles each side of the 221° bearing 

extending from the 9.4-mile radius to 11.8 

miles southwest of the airport. 

Issued in College Park, Georgia, on June 21, 

2021. 

Andreese C. Davis, 

Manager, Airspace & Procedures Team South, 

Eastern Service Center, Air Traffic 

Organization. 

[FR Doc. 2021–13492 Filed 6–24–21; 8:45 am] 

BILLING CODE 4910–13–P 

DEPARTMENT OF HOUSING AND 

URBAN DEVELOPMENT 

24 CFR Part 100 

[Docket No. FR–6251–P–01] 

RIN 2529–AB02 

Reinstatement of HUD’s Discriminatory 

Effects Standard 

AGENCY: Office of the Assistant 

Secretary for Fair Housing and Equal 

Opportunity, HUD. 

ACTION: Proposed rule. 

SUMMARY: In 2020, HUD published a 

rule titled ‘‘HUD’s Implementation of 

the Fair Housing Act’s Disparate Impact 

Standard’’ (‘‘2020 Rule’’). Prior to the 

effective date of the 2020 rule, the U.S. 

District Court for the District of 

Massachusetts issued a preliminary 

injunction in Massachusetts Fair 

Housing Center v. HUD, staying HUD’s 

implementation and enforcement of the 

rule. Consequently, the 2020 Rule never 

took effect. After reconsidering the 2020 

Rule, HUD is proposing to recodify its 

previously promulgated rule titled, 

‘‘Implementation of the Fair Housing 

Act’s Discriminatory Effects Standard’’ 

(‘‘2013 Rule’’), which, as of the date of 

publication of this Proposed Rule, 

remains in effect due to the preliminary 

injunction. HUD believes the 2013 Rule 

better states Fair Housing Act 

jurisprudence and is more consistent 

with the Fair Housing Act’s remedial 

purposes. 

DATES: Comment due date: August 24, 

2021. 

ADDRESSES: Interested persons are 

invited to submit written comments 

regarding this rule to the Regulations 

Division, Office of General Counsel, 

Department of Housing and Urban 

Development, 451 7th Street SW, Room 

10276, Washington, DC 20410. All 

communications should refer to the 

above docket number and title. There 

are two methods for submitting public 

comments. 

1. Electronic Submission of 

Comments. Interested persons may 

submit comments electronically through 

the Federal eRulemaking Portal at 

www.regulations.gov. HUD strongly 

encourages commenters to submit 

comments electronically. Electronic 

submission of comments allows the 

commenter maximum time to prepare 

and submit a comment, ensures timely 

receipt by HUD, and enables HUD to 

make them immediately available to the 

public. Comments submitted 

electronically through the 

www.regulations.gov website can be 

viewed by other commenters and 

interested members of the public. 

Commenters should follow the 

instructions provided on that site to 

submit comments electronically. 

2. Submission of Comments by Mail. 

Comments may be submitted by mail to 

the Regulations Division, Office of 

General Counsel, Department of 

Housing and Urban Development, 451 

7th Street SW, Room 10276, 

Washington, DC 20410–0500. 

Note: To receive consideration as 

public comments, comments must be 

submitted through one of the two 

methods specified above. Again, all 

submissions must refer to the docket 

number and title of the rule. 

No Facsimile Comments. Facsimile 

(FAX) comments are not acceptable. 

Public Inspection of Public 

Comments. All properly submitted 

comments and communications 

submitted to HUD will be available for 

public inspection and copying between 

8 a.m. and 5 p.m. weekdays at the above 

address. Due to security measures at the 

HUD Headquarters building, an 

appointment to review the public 

comments must be scheduled in 

advance by calling the Regulations 

Division at 202–708–3055 (this is not a 

toll-free number). Individuals with 

speech or hearing impairments may 

access this number via TTY by calling 

the Federal Relay Service at 800–877– 

8339. Copies of all comments submitted 

are available for inspection and 

downloading at www.regulations.gov. 

FOR FURTHER INFORMATION CONTACT: 

Kathleen M. Pennington, Acting 

Associate General Counsel for Fair 

Housing, Office of General Counsel, U.S. 

Department of Housing and Urban 

Development, 451 7th Street SW, 

Washington, DC 20410–0500, email 

HUDDisparateImpact2021@hud.gov or 

telephone number 202–402–3330 (this 

is not a toll-free number). Persons with 

hearing and speech impairments may 

contact this phone number via TTY by 

calling the Federal Relay Service at 800– 

877–8399 (this is a toll-free number). 

SUPPLEMENTARY INFORMATION: 

I. Background 

Title VIII of the Civil Rights Act of 

1968, as amended (‘‘Fair Housing Act’’ 

or ‘‘Act’’), prohibits discrimination in 

the sale, rental, or financing of 

dwellings and in other housing-related 

activities because of race, color, religion, 

sex, disability, familial status, or 

national origin.1 Through the Fair 


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v. Aimco Props., L.P., 814 F.3d 1213, n.1 (11th Cir. 

2016) (noting the term disability is generally 

preferred over handicap). 

2 42 U.S.C. 3601. 

3Trafficante v. Metro. Life Ins. Co., 409 U.S. 205, 

209 (1972). 

4Tex. Dep’t of Hous. & Cmty. Affairs v. Inclusive 

Cmtys. Project, Inc., 576 U.S. 519, 529 (2015) (citing 

Report of the National Advisory Commission on 

Civil Disorders 91 (1968) (Kerner Commission 

Report). 

5 Id. at 529 (citing Kerner Commission Report). 

6 Id. at 539. 

7Trafficante, 409 U.S. at 211 (1972). 

8See 42 U.S.C. 3608(a), 3612, 3614a. 

9See, e.g., Graoch Assocs. # 33, L.P. v. Louisville/ 

Jefferson County Metro Human Relations Comm’n, 

508 F.3d 366, 378 (6th Cir. 2007) (citing Arthur v. 

City of Toledo, 782 F.2d 565, 575 (6th Cir. 1986)); 

Hallmark Developers, Inc. v. Fulton County, Ga., 

466 F.3d 1276, 1286 (11th Cir. 2006) (citing Hous. 

Investors, Inc. v. City of Clanton, Ala., 68 F. Supp. 

2d 1287, 1298 (M.D. Ala. 1999)); Huntington 

Branch, NAACP v. Town of Huntington, 844 F.2d 

926, 937 (2nd Cir. 1988) (citing Metro Hous. Dev. 

Corp. v. Vill. of Arlington Heights, 558 F.2d 1283, 

1290 (7th Cir. 1977), aff’d, 488 U.S. 15 (1988) (per 

curium); Betsey v. Turtle Creek Assocs., 736 F.2d 

983, 987 n.3 (4th Cir. 1984) (citing Metro Hous. Dev. 

Corp v. Vill. of Arlington Heights, 558 F.2d 1283, 

1290 (7th Cir. 1977)); Metro. Housing Dev. Corp. v. 

Village of Arlington Heights, 558 F.2d 1283, 1290 

(7th Cir. 1977) (citing Trafficante v. Metropolitan 

Life Ins. Co., 409 U.S. 205, 209–10 (1972)); United 

States. v. City of Black Jack, Missouri, 508 F. 2d 

1179, 1184–86 (8th Cir. 1974). 

10 Graoch Assocs. #33, L.P., 508 F.3d at 374 

(quoting Griggs v. Duke Power Co., 401 U.S. 424, 

431 (1971) (a Title VII case)). 

11 78 FR, 11460, 11461 (Feb. 15, 2013) (citing, e.g., 

HUD v. Twinbrook Village Apts., No. 02–00025600– 

0256–8, 2001 WL 1632533, at *17 (HUD ALJ Nov. 

9, 2001) (‘‘A violation of the [Act] may be premised 

on a theory of disparate impact.’’); HUD v. Carlson, 

No. 08–91–0077–1, 1995 WL 365009 (HUD ALJ 

June 12, 1995) (‘‘A policy or practice that is neutral 

on its face may be found to be violative of the Act 

if the record establishes a prima facie case that the 

policy or practice has a disparate impact on 

members of a protected class, and the Respondent 

cannot prove that the policy is justified by business 

necessity.’’); HUD v. Ross, No. 01–92–0466–18, 

1994 WL 326437, at *5 (HUD ALJ July 7, 1994) 

(‘‘Absent a showing of business necessity, facially 

neutral policies which have a discriminatory 

impact on a protected class violate the Act.’’); HUD 

v. Carter, No. 03–90–0058–1, 1992 WL 406520, at 

*5 (HUD ALJ May 1, 1992) (‘‘The application of the 

discriminatory effects standard in cases under the 

Fair Housing Act is well established.’’). 

12 78 FR 11460, 11461 (citing Policy Statement on 

Discrimination in Lending, 59 FR 18266, 18269 

(Apr. 15, 1994)). 

13See, e.g., HUD v. Pfaff, 1994 WL 592199, at *8 

(HUD ALJ Oct. 27, 1994); HUD v. Mountain Side 

Mobile Estates P’ship, 1993 WL 367102, at *6 (HUD 

ALJ Sept. 20, 1993); HUD v. Carter, 1992 WL 

406520, at *6 (HUD ALJ May 1, 1992); Twinbrook 

Village Apts., 2001 WL 1632533, at *17 (HUD ALJ 

Nov. 9, 2001); see also Policy Statement on 

Discrimination in Lending, 59 FR. 18266, 18269 

(Apr. 15, 1994) (applying three-step test without 

specifying where the burden lies at each step). 

14See, e.g., Oti Kaga, Inc. v. S. Dakota Hous. Dev. 

Auth., 342 F.3d 871, 883 (8th Cir. 2003); Lapid 

–Laurel, L.L.C. v. Zoning Bd. of Adjustment, 284 

F.3d 442, 466–67 (3d Cir. 2002); Langlois v. 

Abington Hous. Auth., 207 F.3d 43, 49–50 (1st Cir. 

2000); Huntington Branch NAACP v. Town of 

Huntington, 844 F.2d 926, 939 (2d Cir. 1988). 

15 78 FR 11460. 

16See also 2011 Notice of Proposed Rulemaking, 

76 FR 70911, 70922 (Nov. 16, 2011) (‘‘In keeping 

with the ‘broad remedial intent’ of Congress in 

passing the Fair Housing Act, and consequently the 

Act’s entitlement to a ‘generous construction’ HUD 

. . . has repeatedly determined that the Fair 

Housing Act is directed to the consequences of 

housing practices, not simply their purpose.’’) 

(citing Havens Realty v. Coleman, 455 U.S. 363, 380 

(1982); City of Edmonds v. Oxford House, Inc., 514 

U.S. 725, 731–732 (1995) (internal citations 

removed)). 

17 78 FR 11460, 11461 (citing 126 Cong. Rec. 

31,166–31,167 (1980) (statement of Sen. Mathias 

reading into the record letter of HUD Secretary)). 

18 78 FR 11460, 11461–62. 

Housing Act, Congress codified its 

remedial purpose, providing that ‘‘[i]t is 

the policy of the United States to 

provide, within constitutional 

limitations, for fair housing throughout 

the United States.’’ 2 The Act’s 

protections are meant to be ‘‘broad and 

inclusive.’’ 3 Congress passed the Act in 

the wake of the assassination of Dr. 

Martin Luther King, Jr., recognizing that 

‘‘residential segregation and unequal 

housing and economic conditions in the 

inner cities’’ were ‘‘significant, 

underlying causes of the social unrest’’ 4

and that both open and covert race 

discrimination were preventing 

integrated communities.5 As the 

Supreme Court reiterated more recently, 

the Act’s expansive purpose is to 

‘‘eradicate discriminatory practices 

within a sector of the Nation’s 

economy’’ and to combat and prevent 

segregation and discrimination in 

housing.6 Congress considered the 

realization of this policy ‘‘to be of the 

highest priority.’’ 7

The Act gives HUD the authority and 

responsibility for administering and 

enforcing the Act, including the 

authority to conduct formal 

adjudications of complaints and to 

promulgate rules to interpret and carry 

out the Act.8 Through that authority, 

HUD proposes this rulemaking. 

Discriminatory Effects Law Under the 

Fair Housing Act Prior to HUD’s 2013 

Rule 

HUD’s 2013 Rule broke no new 

ground, but instead largely codified 

longstanding judicial and agency 

consensus regarding discriminatory 

effects law. Courts had long found that 

discrimination under the Act may be 

established through evidence of 

discriminatory effects, i.e., facially 

neutral practices with an unjustified 

discriminatory effect. Indeed, all federal 

courts of appeals to have addressed the 

question had held that liability under 

the Act could be established by a 

showing that a neutral policy or practice 

either has a disparate impact on a 

protected group or creates, perpetuates, 

or increases segregation, even if such a 

policy or practice was not adopted for 

a discriminatory purpose.9 As the Sixth 

Circuit explained, the Act ‘‘proscribes 

not only overt discrimination but also 

practices that are fair in form, but 

discriminatory in operation.’’ 10

HUD had for decades—consistent 

with this judicial consensus— 

concluded that facially neutral practices 

that have an unjustified discriminatory 

effect on the basis of a protected 

characteristic, regardless of intent, 

violate the Act.11 For example, in 1994, 

HUD, along with nine other agencies 

and the Department of Justice, issued a 

joint policy statement that recognized 

disparate impact liability under the 

Act.12

Although there had been some minor 

variation in the application of the 

discriminatory effects framework prior 

to the 2013 Rule, HUD and the federal 

appellate courts were largely in 

agreement. HUD has always used a 

three-step burden-shifting approach,13

as did many federal courts of appeals 

prior to the 2013 Rule.14 Thus, HUD’s 

2013 Rule simply codified a familiar 

standard. 

HUD’s 2013 Discriminatory Effects Rule 

In February 2013, after notice and 

public comment, and taking decades of 

caselaw into consideration, HUD 

published the 2013 Rule, which 

‘‘formalize[d] its long-held recognition 

of discriminatory effects liability under 

the Act and, for purposes of providing 

consistency nationwide, formalize[d] a 

burden-shifting test for determining 

whether a given practice has an 

unjustified discriminatory effect, 

leading to liability under the Act.’’ 15 In 

promulgating the 2013 Rule, HUD noted 

the Act’s ‘‘broad remedial intent;’’ 16

HUD’s prior positions, including that 

discriminatory effects liability was 

‘‘imperative to the success of the civil 

rights law enforcement;’’ 17 and the 

consistent application of discriminatory 

effects liability in the four previous 

decades (with minor variations) by 

HUD, the Department of Justice, nine 

other federal agencies, and federal 

courts.18

Among other things, the 2013 Rule 

codified a three-part burden-shifting 

framework consistent with frameworks 

on which HUD and courts had long 

relied: (1) The plaintiff or charging party 

is first required to prove as part of the 

prima facie showing that a challenged 

practice caused or predictably will 

cause a discriminatory effect; (2) if the 

plaintiff or charging party makes this 

prima facie showing, the defendant or 

respondent must then prove that the 

challenged practice is necessary to 

achieve one or more substantial, 


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19 78 FR 11460, 11482; see, e.g., Inclusive Cmtys. 

Project, Inc., 576 U.S. at 527 (overviewing the 2013 

Rule’s burden shifting framework). 20 Inclusive Cmtys. Project, Inc., 576 U.S. at 519, 

532–35. 21See Petition for a Writ of Certiorari, in Tex. 

Dep’t of Hous. & Cmty. Affairs et al., v. Inclusive 

Cmtys. Project, Inc., 573 U.S. 991, No. 13–1371, 

2014 U.S. S. Ct. Briefs LEXIS 1848, at *9; See 

Questions Presented in, Tex. Dep’t of Hous. & Cmty. 

Affairs et al., v. Inclusive Cmtys Project, Inc., 573 

U.S. 991, The United States Supreme Court 1, 1, 

https://www.supremecourt.gov/qp/13-01371qp.pdf. 

22 Inclusive Cmtys. Project, Inc., 573 U.S. 991 

(2014), 2014 U.S. LEXIS 4912 at *1 (‘‘Petition for 

writ of certiorari to the United States Court of 

Appeals for the Fifth Circuit granted limited to 

Question 1 presented by the petition.’’); See also 

Questions Presented in, Inclusive Cmtys Project, 

Inc., 573 U.S. 991, The United States Supreme 

Court 1, 1, https://www.supremecourt.gov/qp/13- 

01371qp.pdf. 

23 Inclusive Cmtys. Project, Inc., at 534 (citing 

Griggs v. Duke Power Co., 401 U.S. 424 (1971); Bd. 

of Educ. v. Harris, 444 U.S. 130 (1979); Smith v. 

City of Jackson, 544 U.S. 228 (2005)). 

24 Id. at 536. 

25 Id. at 537. 26 Id. at 539 (citing 42 U.S.C. 3601). 27 Id.at 546–47 (internal citations and quotations 

omitted). 28 Id. at 531. 29 Id. (quoting Griggs, 401 U.S. at 431–32). 30 Id. at 540. 31 Id. (quoting Griggs, 401 U.S. at 431). 

32 Id. at 541, 542. 

33 Id. at 527 (explaining the 2013 Rule, its burden 

shifting framework, and how the second prong is 

analogous to Title VII’s requirement that a 

challenged practice be job related), 528 (noting the 

Court of Appeals for the Fifth Circuit relied on 

HUD’s 2013 Rule), 541 (citing the 2013 Rule in 

explaining that disparate impact liability is 

properly limited to give housing authorities and 

private developers leeway to state and explain the 

valid interest served by their policies via step two 

of the burden shifting framework); 542 (approvingly 

noting that HUD recognized in its 2013 Rule that 

disparate impact liability ‘‘does not mandate that 

affordable housing be located in neighborhoods 

with any particular characteristic’’). 

34 Id. at 540–541. 

35See, e.g., MHANY Mgmt. Inc. v. Cnty. of 

Nassau, 819 F.3d 581, 618 (2d Cir. 2016) (‘‘The 

Supreme Court implicitly adopted HUD’s 

approach’’); Ave 6E Invs., LLC v. City of Yuma, 818 

F.3d 493, 512–513 (9th Cir. 2016) (citing the 2013 

Rule in describing the three-prong analytical 

structure set forth in Inclusive Communities); Nat’l 

Fair Hous. All. v. Travelers Indem. Co., 261 F. 

Supp. 3d 20, 28–29 (D.D.C. 2017) (stating that the 

Supreme Court ‘‘carefully explained that disparateimpact liability has always been properly limited’’ 

and that ‘‘disparate-impact liability under the FHA 

can be proven under a burden-shifting framework 

analogous to that used in employment 

discrimination cases.’’) (internal citations and 

quotations omitted); Prop. Cas. Insurers Ass’n of 

Am. v. Carson, No. 13–CV–8564, 2017 U.S. Dist. 

LEXIS 94502, at *28–*30 (N.D. Ill. June 20, 2017) 

(finding that HUD’s 2013 adoption of the 3-step 

burden-shifting framework a reasonable 

interpretation of the Act, finding that ‘‘in short, the 

Supreme Court in Inclusive Communities . . . did 

not identify any aspect of HUD’s burden-shifting 

approach that required correction.’’); Burbank 

Apartments Tenant Ass’n v. Kargman, 474 Mass. 

107, 126–27 (Mass. 2016) (explaining that it was 

following the ‘‘burden-shifting framework laid out 

by HUD and adopted by the Supreme Court in 

legitimate, nondiscriminatory interests 

of the defendant or respondent; and (3) 

if the defendant or respondent meets its 

burden at step two, the plaintiff or 

charging party may still prevail by 

proving that the substantial, legitimate, 

nondiscriminatory interests supporting 

the challenged practice could be served 

by another practice that has a less 

discriminatory effect.19

The 2015 Inclusive Communities 

Supreme Court Decision 

In 2015, the Supreme Court confirmed 

that the Act provides for discriminatory 

effects liability in Texas Department of 

Housing and Community Affairs v. 

Inclusive Communities Project, Inc.20

The Court was asked to answer two 

questions: (1) Whether disparate-impact 

claims are cognizable under the Act, 

and (2) if they are, what standards and 

burdens of proof should apply?21 The 

Court declined to consider the second 

question.22

The Court found that Congress’s use 

of the phrase ‘‘otherwise make 

unavailable’’ in § 804(a) and the term 

‘‘discriminate’’ in § 805(a) parallel 

language that the Court had previously 

held to provide for discriminatory 

effects liability under other civil rights 

statutes.23 Moreover, the Court held that 

Congress’s 1988 amendment of the Act 

without altering the relevant text of 

§§ 804(a) or 805(a) indicated that 

Congress ‘‘accepted and ratified the 

unanimous [pre-1988] holdings of the 

[c]ourts of [a]ppeals finding disparateimpact liability.’’ 24 The Court further 

held that Congress’s addition of 

provisions that presuppose disparate 

impact liability as part of the 1988 

amendments further provided 

‘‘convincing confirmation of Congress’ 

understanding that disparate-impact 

liability exists under the FHA.’’ 25 The 

Court further observed that disparate 

impact claims are ‘‘consistent with the 

FHA’s central purpose’’ of ‘‘eradicat[ing] 

discriminatory practices within a sector 

of our [n]ation’s economy.’’ 26

As the Court recognized: ‘‘Much 

progress remains to be made in our 

Nation’s continuing struggle against 

racial isolation. . . . But since the 

passage of the Fair Housing Act in 1968 

and against the backdrop of disparateimpact liability in nearly every 

jurisdiction, many cities have become 

more diverse. The FHA must play an 

important part in avoiding the Kerner 

Commission’s grim prophecy that our 

Nation is moving toward two societies, 

one black, one white—separate and 

unequal. The Court acknowledges the 

Fair Housing Act’s continuing role in 

moving the Nation toward a more 

integrated society.’’ 27

In reaching this holding, the Court 

explained that from its first decision to 

recognize disparate impact liability, in 

Griggs v. Duke Power Co., it ‘‘put 

important limits’’ on the scope of 

liability.28 For example, with respect to 

employment discrimination claims 

under Title VII of the Civil Rights Act, 

Griggs explained that an employer can 

justify a practice that has a disparate 

impact with a ‘‘business necessity’’ 

defense, such that Title VII ‘‘does not 

prohibit hiring criteria with a ‘manifest 

relationship’ to job performance.’’ 29

Similarly, after holding that the Act 

provided for disparate impact liability, 

the Inclusive Communities Court noted 

that, under the Act, ‘‘disparate-impact 

liability has always been properly 

limited in key respects.’’ 30 Quoting 

Griggs, the Court explained that it has 

always been true that disparate impact 

liability under the Act ‘‘mandates the 

‘removal of artificial, arbitrary, and 

unnecessary barriers,’ not the 

displacement of valid governmental 

policies.’’ 31

The Court then sketched out some of 

these long-standing limitations on the 

scope of disparate-impact liability, 

including: (i) The requirement that 

‘‘housing authorities and private 

developers [have] leeway to state and 

explain the valid interest served by their 

policies . . . analogous to the business 

necessity standard under Title VII;’’ and 

(ii) the requirement that a ‘‘claim that 

relies on a statistical disparity must fail 

if the plaintiff cannot point to a 

defendant’s policy or policies causing 

that disparity.’’ 32

HUD accounted for these same wellsettled limitations in the 2013 Rule, 

which requires a charging party or 

plaintiff to challenge a specific practice 

causing the alleged discriminatory effect 

and permits a defendant to defend a 

practice that causes such an impact by 

demonstrating that it is necessary to 

achieve a substantial, legitimate, 

nondiscriminatory interest. The Court 

did not call into question the 2013 

Rule’s framework for analyzing 

discriminatory effects claims, nor did it 

suggest that HUD should make any 

modifications to that framework. To the 

contrary, the Court cited HUD’s 2013 

Rule multiple times with approval.33

For instance, the Court noted that the 

burden-shifting framework of Griggs and 

its progeny, adopted by HUD in the 

2013 Rule, adequately balanced the 

interests of plaintiffs and defendants by 

giving housing providers the ability ‘‘to 

state and explain the valid interest 

served by their policies.’’ 34 Multiple 

courts have since read Inclusive 

Communities as affirming or endorsing 

the 2013 Rule’s burden-shifting test.35


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[Inclusive Communities].’’); but see Inclusive Cmtys. 

Project v. Lincoln Prop. Co., 920 F.3d 890, 902 (5th 

Cir. 2019) (noting that ‘‘debate exists regarding 

whether in ICP the Supreme Court adopted the 

[2013] regulation’s approach or modified it’’ but 

that it believed that ICP ‘‘announced a more 

demanding test’’ through the announcement of 

‘‘safeguards’’ to incorporate into the burden shifting 

framework, such as a ‘‘robust causality’’ 

requirement’’). 

36 81 FR 69012, 69012. 

37Prop. Cas. Insurers Ass’n of Am. v. Donovan, 

66 F. Supp. 3d 1018, 1051–53 (N.D. Ill. 2014). 

38 Id. at 1049, 1054. 

39 81 FR 69012, 69012. 

40 83 FR 28560. 

41 84 FR 42854. 

42See, e.g., 85 FR 60317, 60319 (overview of 

some of the comments making these points). 

43 85 FR 60288. 

44 Mass. Fair Hous. Ctr. v. HUD, No. 20–11765– 

MGM, 2020 U.S. Dist. LEXIS 205633, at *20–21 (D. 

Mass. Oct. 25, 2020). 

45 Id. at *9, *10 n.2, *17–18. 

46 Id. at *17–18. 

47 Id. at *18-*19. 

HUD’s 2016 Notice: Application of the 

Fair Housing Act’s Discriminatory 

Effects Standard to Insurance 

In 2016, HUD published a notice 

(‘‘2016 Notice’’) supplementing its 

response to certain comments 

concerning homeowners insurance 

received during rulemaking for the 2013 

Rule.36 The notice responded to an 

order issued in Property Casualty 

Insurers Association of America 

(PCIAA) v. Donovan. In that case, the 

U.S. District Court for the Northern 

District of Illinois had issued a decision 

upholding the 2013 Rule’s burdenshifting framework for analyzing 

discriminatory effects claims,37 while 

remanding for further consideration of 

certain comments concerning 

homeowners insurance.38 In its 2016 

Notice, HUD stated, inter alia, that 

‘‘[a]fter careful reconsideration of the 

insurance industry comments in 

accordance with the court’s decision 

. . . HUD has determined that 

categorical exemptions or safe harbors 

for insurance practices are unworkable 

and inconsistent with the broad fair 

housing objectives and obligations 

embodied in the Act. HUD continues to 

believe that the commenters’ concerns 

regarding application of the 

discriminatory effects standard to 

insurance practices can and should be 

addressed on a case-by-case basis.’’ 39

HUD’s 2020 Disparate Impact Rule 

On June 20, 2018, HUD published an 

Advance Notice of Proposed 

Rulemaking (‘‘ANPRM’’), inviting 

public comment on ‘‘what changes, if 

any’’ should be made to the 2013 Rule.40

HUD then published a Notice of 

Proposed Rulemaking on August 19, 

2019 (‘‘2019 Proposed Rule’’). In the 

2019 Proposed Rule, HUD proposed to 

‘‘amend HUD’s interpretation of the Fair 

Housing Act’s disparate impact standard 

to better reflect the Supreme Court’s 

2015 ruling in Inclusive Communities, 

and to provide clarification regarding 

the application of the standard to State 

laws governing the business of 

insurance.’’ 41

In response to the 2019 Proposed 

Rule, HUD received approximately 

45,000 comments, most of which 

opposed the proposed changes and 

many of which raised significant legal 

and policy concerns with the 2019 

Proposed Rule. Commenters objected 

that the proposed changes did not align 

with caselaw and made discriminatory 

effects claims effectively impossible to 

plead and prove in many instances, thus 

contravening the core holding of 

Inclusive Communities.42 HUD’s own 

experience investigating, charging, and 

litigating discriminatory effects cases 

aligned with these comments, as will be 

detailed later. 

On September 24, 2020, HUD 

published the 2020 Rule, which, inter 

alia, removed the definition of 

discriminatory effect, added pleading 

elements that made it far more difficult 

to initiate a case, altered the burdenshifting framework, created new 

defenses, and limited available remedies 

in disparate impact claims.43 Some of 

these changes are described more fully 

below, along with HUD’s explanation 

for why it now believes they are 

unwarranted. 

Massachusetts Fair Housing Ctr. v. HUD 

Order Staying Implementation of the 

2020 Rule. 

Following publication of the 2020 

Rule, HUD was sued in three separate 

federal courts—Massachusetts Fair 

Housing Ctr., et al. v. HUD, No. 3:20– 

cv–11765 (D. Mass.); National Fair 

Housing Alliance, et al. v. HUD, No. 

3:20-cv-07388 (N.D. Cal.); Open 

Communities, et al. v. HUD, No. 3:20– 

cv–01587 (D. Conn.). The plaintiffs in 

each case contended that the 2020 Rule 

was invalid because it was inconsistent 

with the Act and that its promulgation 

violated the Administrative Procedure 

Act (‘‘APA’’). Prior to the effective date 

of the 2020 Rule, the U.S. District Court 

for the District of Massachusetts in 

Massachusetts Fair Housing Ctr. v. HUD 

issued a preliminary injunction staying 

the implementation and postponing the 

effective date of the 2020 Rule. The 

district court ordered HUD to ‘‘preserve 

the status quo pursuant to the 

regulations in effect as of the date of this 

Order.’’ 44

In its order, the district court 

preliminarily found that many 

significant changes made by the 2020 

Rule were likely not supported by 

Inclusive Communities or other case 

law. Similarly, the court concluded that 

the 2020 Rule did not appear to bring 

clarity to the discriminatory effects 

framework, but rather introduced new 

concepts that had never been part of 

disparate-impact caselaw without fully 

explaining their meaning. In support of 

its conclusions, the court pointed to 

numerous provisions in the 2020 Rule 

as problematic, including § 100.500(b) 

(‘‘requiring at ‘the pleadings stage,’ 

among other things, that plaintiffs 

‘sufficiently plead facts to support’ . . . 

‘[t]hat the challenged policy or practice 

is arbitrary, artificial, and unnecessary 

to achieve a valid interest or legitimate 

objective such as a practical business, 

profit, policy consideration, or 

requirement of law’’’); § 100.500(c)(2) 

(permitting defendants to ‘‘‘rebut a 

plaintiff’s allegation under (b)(1) . . . 

that the challenged policy or practice is 

arbitrary, artificial, and unnecessary by 

producing evidence showing that the 

challenged policy or practice’ merely 

‘advances a valid interest’’’; 

§ 100.500(c)(3) (requiring ‘‘at the third 

step of the burden-shifting framework 

that the plaintiff prove ‘a less 

discriminatory policy or practice exists 

that would serve the defendant’s 

identified interest (or interests) in an 

equally effective manner without 

imposing materially greater costs on, or 

creating other material burdens for, the 

defendant’’’ (emphasis in original)); 

§ 100.500(d)(1) and (d)(2)(iii) 

(‘‘conflating of a plaintiff’s prima facie 

burden and pleading burden’’); and 

§ 100.500(d)(2)(i) (the outcome 

prediction defense).45

The district court stated that the 

‘‘practical business, profit, policy 

consideration’’ language, the ‘‘outcome 

prediction’’ defense, changes to the 

third element of the burden-shifting 

framework, and the conflating of a 

plaintiff’s prima facie burden and 

pleading burden, ran the risk of 

‘‘effectively neutering’’ discriminatory 

effects liability under the Act, and were 

all likely unsupported by Inclusive 

Communities or other judicial 

decisions.46 The district court also 

stated that the 2020 Rule’s use of ‘‘new 

and undefined terminology, altered 

burden-shifting framework, and 

perplexing defenses’’ accomplished ‘‘the 

opposite of clarity’’ and was likely 

‘‘arbitrary and capricious.’’ 47 The court 

stated that ‘‘[t]here can be no doubt that 

the 2020 Rule weakens, for housing 


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48 Id. at *10. 

49 Id. at *19. 

50See 86 FR 7487, 7488. 

51See generally Inclusive Cmtys. Project, Inc., 576 

U.S. 519 (2015). 

52 Griggs v. Duke Power Co., 401 U.S. 424, 430– 

31 (1971). 

53 Inclusive Cmtys. Project, Inc., 576 U.S. at 540 

(quoting Griggs, 401 U.S. at 431); see also Inclusive 

Cmtys. Project, Inc., 576 U.S. at 544 (cautioning 

against proof standards that ‘‘displace valid 

governmental and private priorities, rather than 

solely ‘remov[ing] . . . artificial, arbitrary, and 

unnecessary barriers’ ’’) (quoting Griggs, 401 U.S. at 

431) (alterations in original). 

54 Id. at 540. 

55See, e.g., Town of Huntington, NY v. 

Huntington Branch, NAACP, 488 U.S. 15 (1988); 

United States v. City of Black Jack, 508 F.2d 1179, 

1184, 1187–88 (8th Cir. 1974) (specific facts 

produced during the case supported the court’s 

determination that the policy was one of those 

‘‘artificial, arbitrary, and unnecessary’’ practices 

that is properly invalidated under disparate impact 

doctrine); Greater New Orleans Fair Hous. Action 

Ctr. v. St. Bernard Parish, 641 F. Supp. 2d 563, 567– 

568 (E.D. La. 2009) (relying on information gathered 

after the pleadings to find disparate impact). 

discrimination victims and fair housing 

organizations, disparate impact liability 

under the Fair Housing Act. . . . In 

addition, the 2020 Rule arms defendants 

with broad new defenses which appear 

to make it easier for offending 

defendants to dodge liability and more 

difficult for plaintiffs to succeed. In 

short, these changes constitute a 

massive overhaul of HUD’s disparate 

impact standards, to the benefit of 

putative defendants and to the 

detriment of putative plaintiffs.’’ 48 The 

court stated that the 2020 Rule’s 

‘‘massive changes . . . pose a real and 

substantial threat of imminent harm’’ to 

the Massachusetts Fair Housing Center 

by raising the burdens and costs of 

pursuing claims under a discriminatory 

effects theory.49

II. HUD’S Reconsideration of the 2020 

Rule 

On January 26, 2021, President Biden 

issued a Memorandum ordering the 

Department to ‘‘take all steps necessary 

to examine the effects of the [2020 

Rule], including the effect that 

amending the [2013 Rule] has had on 

HUD’s statutory duty to ensure 

compliance with the Fair Housing Act’’ 

and ‘‘take any necessary steps . . . to 

implement the Fair Housing Act’s 

requirements that HUD administer its 

programs in a manner that . . . furthers 

. . . HUD’s overall duty to administer 

the Act [] including by preventing 

practices with an unjustified 

discriminatory effect.’’ 50

Consistent with the President’s 

Memorandum, HUD has reconsidered 

the 2020 Rule and proposes that the 

2013 Rule be recodified. In so 

proposing, HUD considered prior public 

comments on the various rulemakings 

described above, HUD’s responses to 

those comments, HUD’s 2016 

supplemental explanation regarding the 

2013 Rule’s applicability to the 

insurance industry, legal precedent 

including Inclusive Communities, the 

Massachusetts Fair Housing Center 

court’s order, and HUD’s own 

experience with discriminatory effects 

cases over 40 years. 

In HUD’s experience, the 2013 Rule 

sets a more appropriately balanced 

standard for pleading, proving, and 

defending a fair housing case alleging a 

policy or practice has a discriminatory 

effect. The 2013 Rule provides greater 

clarity about what each party must show 

by relying on concepts that have a long 

history in judicial and agency 

precedent. It appropriately balances the 

need to ensure that frivolous claims do 

not go forward with a realistic 

understanding of the practical 

challenges to litigating these claims. 

With regard to the 2020 Rule, HUD’s 

experience investigating and 

prosecuting discriminatory effects cases 

informs that many of the points made by 

commenters and the Massachusetts 

District Court are, in HUD’s opinion, 

correct, including that the changes the 

2020 Rule makes, such as amending 

pleading standards, changing the 

burden shifting framework, and adding 

defenses, all favoring respondents, will 

at the very least introduce unnecessary 

confusion and will at worst make 

discriminatory effects liability a 

practical nullity. 

HUD now proposes to recodify the 

2013 Rule’s discriminatory effects 

standard and invites comments on this 

proposal. HUD believes that this 

standard is more consistent with the 

Act’s purpose, prior caselaw under the 

Act, including Inclusive Communities, 

other civil rights authorities, including 

the Equal Credit Opportunity Act and 

Title VII, and HUD’s prior 

interpretations of the Act. While HUD 

previously stated that the 2020 Rule was 

simply intended to implement the 

Supreme Court’s opinion in Inclusive 

Communities, HUD now believes that 

Inclusive Communities maintained the 

fundamentals of long-established 

disparate-impact precedent rather than 

changing them. Moreover, based on 

HUD’s experience investigating and 

litigating discriminatory effects cases, 

HUD believes that the practical effect of 

the 2020 Rule’s amendments is to 

severely limit HUD’s and plaintiffs’ use 

of the discriminatory effects framework 

in ways that substantially diminish that 

frameworks’ effectiveness in 

accomplishing the purposes that 

Inclusive Communities articulated. 

By comparison, in HUD’s experience, 

the 2013 Rule has provided a workable 

and balanced framework for 

investigating and litigating 

discriminatory effects claims that is 

consistent with the Act, HUD’s own 

guidance, Inclusive Communities, and 

other jurisprudence. 

As noted above, the Court in Inclusive 

Communities heavily relied on Griggs, 

which is the foundation of Title VII 

disparate impact jurisprudence, to 

illustrate the well-settled principles of 

disparate impact under the Act, all of 

which are fully consistent with the 2013 

Rule.51 In Griggs, the Court explained 

that, under Title VII, ‘‘[w]hat is required 

by Congress is the removal of artificial, 

arbitrary, and unnecessary barriers to 

employment when the barriers operate 

invidiously to discriminate on the basis 

of racial or other impermissible 

classification.’’ 52 Quoting from its 

foundational decision in Griggs, the 

Supreme Court in Inclusive 

Communities observed that ‘‘[d]isparateimpact liability mandates the ‘removal 

of artificial, arbitrary, and unnecessary 

barriers,’ not the displacement of valid 

governmental policies.’’ 53 This 

quotation from a seminal decision of 

longstanding disparate impact doctrine 

is properly read as maintaining existing 

law, not profoundly changing it. As 

Inclusive Communities explicitly stated, 

‘‘disparate-impact liability has always 

been properly limited in key respects’’ 

(emphasis added), making clear that it 

was not adding additional pleading or 

proof requirements or calling for a 

significant departure from pre-existing 

precedent under the Act and Title VII.54

Furthermore, reading Inclusive 

Communities to support a heightened 

pleading standard is contradicted by the 

fact that the ‘‘heartland’’ cases cited by 

the Court would not have survived a 

motion to dismiss under that standard 

because plaintiffs in those cases did not 

have specific facts to plausibly allege 

that a policy or practice was arbitrary, 

artificial, or unnecessary until after 

discovery.55 Finally, because Inclusive 

Communities considered a judgment 

reached after discovery and bench trial, 

the Court had no occasion or 

opportunity to consider the proper 

pleading standards for cases brought 

under the Act. The parties did not brief 

or argue such questions to the Court, 

making it particularly unlikely that the 

Court intended to reach them. 

For these reasons and others, HUD 

believes that Inclusive Communities’ 

quotation of Griggs’ decades-old 

‘‘artificial, arbitrary, and unnecessary’’ 

formulation is best construed as 


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56 84 FR 42854; 85 FR 60288, 60306–07, 60332. 

57See, e.g., Graoch Assocs. # 33, L.P., 508 F.3d 

at 378 (6th Cir. 2007) (there are ‘‘two types of 

discriminatory effects which a facially neutral 

housing decision can have: The first occurs when 

that decision has a greater adverse impact on one 

racial group than on another. The second is the 

effect which the decision has on the community 

involved; if it perpetuates segregation and thereby 

prevents interracial association it will be 

considered invidious under the Fair Housing Act 

independently of the extent to which it produces 

a disparate effect on different racial groups.’’); Ave. 

6E Invs. v. City of Yuma, 818 F.3d 493, 503 (9th 

Cir. 2016) (‘‘[A]s the Supreme Court recently 

reaffirmed [in ICP], the FHA also encompasses a 

second distinct claim of discrimination, disparate 

impact, that forbids actions by private or 

governmental bodies that create a discriminatory 

effect upon a protected class or perpetuate housing 

segregation without any concomitant legitimate 

reason.’’) (emphasis added); see also Huntington 

Branch, NAACP v. Huntington, 844 F.2d 926, 937 

(2nd Cir. 1988); Metro. Hous. Dev. Corp. v. Vill. of 

Arlington Heights, 558 F.2d 1283, 1290 (7th Cir. 

1977); Nat’l Fair Hous. All. v. Bank of Am., NA., 

401 F. Supp. 3d 619, 641 (D. Md. 2019) (allowing 

claim to proceed past motion to dismiss where 

plaintiff pleaded facts sufficient to allege that 

defendant’s policies ‘‘forestall housing integration 

and freeze existing racial segregation patterns’’); 

Hallmark Devs., Inc. v. Fulton Cnty., 386 F. Supp. 

2d 1369, 1383 (N.D. Ga. 2005). 

58 84 FR 42854; 85 FR 60288, 60306–07, 60322. 

59 42 U.S.C. 3602(1)(2) (emphasis added). 60See Inclusive Cmtys. Project, Inc., 576 U.S. at 

539–40 (2015) (describing City of Black Jack, 508 

F.2d at 1184 as ‘‘at the heartland of disparateimpact liability’’). 

61 85 FR 60288, 60316–17. 

62 85 FR 60288, 60290. 

63 85 FR 60321 (citing ‘‘Application of the Fair 

Housing Act’s Discriminatory Effects Standard to 

Insurance’’ 81 FR 69012). 

64 85 FR 60288, 60333. 

65 Id. 

66 Id. 

67 Id. 

68See Inclusive Cmtys. Project, 576 U.S. at 544– 

45 (noting considerations for courts on how to 

properly construct remedial orders (i.e., be 

consistent with the Constitution, concentrate on the 

elimination of the offending practice, strive to be 

race-neutral), but in no way suggesting that 

remedial orders should be the sole or favored 

remedy in disparate impact cases, or that civil 

penalties in administrative proceedings are 

somehow inappropriate). 

69See, e.g., 42 U.S.C. 3601 note (‘‘Nothing in the 

Fair Housing Act as amended by this Act limits any 

. . . remedy available under the Constitution or any 

other Act of the Congress not so amended’’); 42 

U.S.C. 3612(g)(3) (‘‘If the administrative law judge 

finds that a respondent has engaged . . . in a 

discriminatory housing practice, such 

administrative law judge shall promptly issue an 

order for such relief as may be appropriate, which 

may include actual damages suffered by the 

aggrieved person and injunctive or other equitable 

relief. Such order may, to vindicate the public 

Continued 

maintaining continuity with 

longstanding disparate-impact 

jurisprudence, as reflected in the 2013 

Rule. Accordingly, HUD proposes to 

recodify the 2013 Rule. 

HUD believes other changes the 2020 

Rule made create problems that could 

be cured by a return to the 2013 Rule. 

For example, the 2020 Rule eliminated 

the 2013 Rule’s definition of 

‘‘discriminatory effect,’’ stating that the 

definition was unnecessary because it 

‘‘simply reiterated the elements of a 

disparate impact claim.’’ 56 In 

eliminating this definition, the 2020 

Rule erased ‘‘perpetuation of 

segregation’’ as a recognized type of 

discriminatory effect distinct from 

disparate impact, contrary to well 

established precedent.57 HUD now 

proposes to reaffirm that perpetuation of 

segregation remains, as it always has 

been, a basis for contending that a 

policy has an unlawful discriminatory 

effect. HUD now believes that for 

clarity, a discriminatory effects rule 

should explicitly state that perpetuation 

of segregation is a type of discriminatory 

effect, distinct from disparate impact. 

The 2020 Rule also eliminated from 

the Act’s prohibitions policies or 

practices that could ‘‘predictably 

result[ ] in a disparate impact on a group 

of persons,’’ i.e., those for which the 

disparate impact has not yet manifested 

but will predictably do so.58 As HUD 

stated in 2013, the Act prohibits 

discrimination that is predictable 

because it defines an ‘‘aggrieved 

person’’ as any person who ‘‘believes 

that such person will be injured by a 

discriminatory housing practice that is 

about to occur.’’ 59 And consistent with 

the Act’s plain language, courts have 

found that predictable discriminatory 

effects may violate the Act: ‘‘[t]o 

establish a prima facie case of racial 

discrimination, the plaintiff need prove 

no more than that the conduct of the 

defendant actually or predictably results 

in racial discrimination; in other words, 

that it has a discriminatory effect.’’ 60

The 2020 Rule did not adequately 

explain how the Act and caselaw 

construing it can be read to require 

waiting until harm is inflicted before an 

action with predictable discriminatory 

effects can be challenged, nor does HUD 

perceive that any such explanation 

would be availing, given the plain 

language of the Act and the caselaw 

interpreting it. Thus, HUD proposes to 

recodify the 2013 Rule to correct this 

error. 

In addition, the 2020 Rule created 

new and confusing defenses at both the 

pleading and post-pleading stage, 

including that the challenged policy or 

practice is ‘‘reasonably necessary to 

comply with a third-party 

requirement.’’ 61 The 2020 Rule’s 

preamble stated that this defense would 

not require a showing that the 

challenged policy is the only way to 

comply with such a requirement, only 

that the policy serves that purpose.62

HUD now believes that this defense is 

inconsistent with the Act, which 

specifies that state and local laws 

requiring or permitting discriminatory 

housing practices are invalid. The 

defense would preclude many otherwise 

proper discriminatory effects claims, 

because, for example, a plaintiff may not 

have any practical means of knowing 

whether some other party’s policies also 

contributed to the defendant’s practice. 

Nothing in Inclusive Communities 

suggests this defense is required, let 

alone reasonable, for HUD to create. 

Accordingly, HUD proposes to eliminate 

these provisions by recodifying the 2013 

Rule. 

The 2020 Rule also created a new 

‘‘outcome prediction’’ defense, which 

would in practice exempt most 

insurance industry practices (and many 

other housing-related practices that rely 

on outcome predictions, such as lending 

practices) from liability under a 

disparate impact standard. This is 

inconsistent with HUD’s repeated 

finding, including in the 2020 Rule, that 

‘‘a general waiver of disparate impact 

law for the insurance industry would be 

inappropriate.’’ 63 Although unclear, it 

appears that this defense would suggest 

using comparators that are, in HUD’s 

experience, inappropriate. At the very 

least, the defense introduces 

unnecessary confusion into the 

doctrine. 

The 2020 Rule limited remedies in 

discriminatory effects cases in three 

respects. It specified that ‘‘remedies 

should be concentrated on eliminating 

or reforming the discriminatory practice 

so as to eliminate disparities between 

persons in a particular protected class 

and other persons.’’ 64 It prohibited 

HUD in administrative proceedings 

from pursuing anything but ‘‘equitable 

remedies’’ except that ‘‘where pecuniary 

damage is proved, HUD will seek 

compensatory damages or 

restitution.’’ 65 And it restricted HUD 

from seeking civil penalties in 

discriminatory effects cases unless the 

respondent had been adjudged within 

the last 5 years to have committed 

intentional unlawful housing 

discrimination under the Act.66 HUD 

believes that these limitations have no 

basis in law and run contrary to public 

interest and the purpose of the Act. 

While the 2020 Rule cited Inclusive 

Communities as supporting these 

limitations,67 no part of Inclusive 

Communities suggested such 

limitations.68 Moreover, they are in 

conflict with the plain language of the 

Act, which provides in all cases for a 

wide variety of remedies, including 

injunctive relief, actual damages, 

punitive damages, and civil penalties.69


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interest, assess a civil penalty against the 

respondent. . .’’); 42 U.S.C. 3612(p) (‘‘[i]n any 

administrative proceeding brought under this 

section, or any court proceeding arising therefrom, 

or any civil action under section 812, the 

administrative law judge or the court . . . in its 

discretion, may allow the prevailing party, other 

than the United States, a reasonable attorney‘s fees 

and costs.’’); 42 U.S.C. 3613(c)(1) (‘‘in a civil action 

under subsection (a), if the court finds that a 

discriminatory housing practice has occurred . . . 

the court may award to the plaintiff actual and 

punitive damages, and subject to subsection (d), 

may grant as relief, as the court deems appropriate, 

any permanent or temporary injunction, temporary 

restraining order, or other order . . . .’’). 

70 42 U.S.C. 2000e–5(g)(1). 

71 Inclusive Cmtys. Project, 576 U.S. at 547. 

72 86 FR 7487, 7488. 

73See, e.g., Defendants’ Opposition to Plaintiff’s 

Motion for Leave to Amend Complaint, Prop. Cas. 

Ins. Assoc. of Am. v. Carson and the U.S. Dep’t of 

Hous. and Urb. Dev., No. 1:13–cv–08564 (N.D. Ill. 

2017); Defendants’ Memorandum in Support of 

Their Motion for Summary Judgment and in 

Opposition to Plaintiffs’ Motion for Summary 

Judgment, Am. Ins. Assoc. v. U.S. Dep’t of Hous. 

and Urb. Dev. et al., No. 1:13–cv–00966 (RJL) 

(D.D.C. 2016). 

74See, e.g., MHANY Mgmt. Inc. v. County of 

Nassau, 819 F.3d 581, 618–619 (2d Cir. 2016) 

(deferring to HUD’s [2013] regulation, noting that 

‘‘the Supreme Court implicitly adopted HUD’s 

[burden shifting] approach [in 24 CFR 100.500(c)]’’); 

Ave. 6E Invs., LLC, 818 F.3d at 512–13 (9th Cir. 

2016) (citing Inclusive Communities and the 2013 

Rule at 100.500(c) for the same proposition); Nat’l 

Fair Hous. All. v. Travelers Indem. Co., 261 F. 

Supp. 3d 20, 29 (D.D.C. 2017) (citing Inclusive 

Communities and HUD’s 2013 Rule at 100.500(c) as 

standing for the same proposition); Prop. Cas. 

Insurers Ass’n of Am. v. Carson, No. 13–CV–8564, 

2017 U.S. Dist. LEXIS 94502, at *29–30 (N.D. Ill. 

June 20, 2017) (finding that HUD’s 2013 adoption 

of the 3-step burden-shifting framework was a 

reasonable interpretation of the Act and that ‘‘in 

short, the Supreme Court in Inclusive Communities 

. . . did not identify any aspect of HUD’s burdenshifting approach that required correction.’’); 

Burbank Apartments Tenant Ass’n v. Kargman, 474 

Mass. 107, 126–27 (Mass. 2016) (explaining that it 

was following the ‘‘burden-shifting framework laid 

out by HUD and adopted by the Supreme Court in 

[Inclusive Communities].’’). 

75 85 FR 60326. 76 78 FR 11460, 11480. 

Whereas Congress has chosen to limit 

the remedies available in disparateimpact cases under Title VII,70 it has 

made no such choice with respect to the 

Act. Thus, HUD proposes to eliminate 

these provisions by recodifying the 2013 

Rule. 

In sum, HUD now believes that the 

2013 Rule is preferable to the 2020 Rule. 

It believes the 2013 Rule is more 

consistent with judicial precedent 

construing the Fair Housing Act, 

including Inclusive Communities, as 

well as the Act’s broad remedial 

purpose. Based on its experience 

interpreting and enforcing the Act, HUD 

also believes the 2020 Rule, if put into 

effect, threatens to limit the 

effectiveness of the Act’s discriminatory 

effects doctrine in ways that are 

inconsistent with the doctrine 

continuing to play its critical role in 

‘‘moving the Nation toward a more 

integrated society.’’ 71 On the other 

hand, HUD believes that the 2013 Rule 

provided clarity, consistency, and a 

workable, balanced framework, 

recognized by the Supreme Court, under 

which to analyze discriminatory effects 

claims, and under which HUD can 

better ensure it has the tools to further 

its ‘‘duty to administer the Act [ ] 

including by preventing practices with 

an unjustified discriminatory effect.’’ 72

III. This Proposed Rule 

For the reasons described above, HUD 

proposes to amend §§ 100.5 and 100.500 

to recodify the discriminatory effects 

regulation specified in the 2013 Rule. 

As HUD has stated, the 2013 Rule was 

consistent with Inclusive 

Communities.73 The vast majority of 

courts that considered this issue 

subsequent to Inclusive Communities 

also found that the 2013 Rule was 

consistent with Inclusive 

Communities.74 HUD thus proposes this 

rule because it believes the 2013 Rule 

accurately reflects the discriminatory 

effects framework under the Act, 

whereas the 2020 Rule does not. 

HUD does not propose to amend 

§ 100.70. The 2020 Rule made changes 

unrelated to § 100.500 by simply adding 

examples to an already non-exhaustive 

list of prohibited activities under the 

Act at § 100.70(d)(5).75 Specifically, it 

noted that enacting or implementing 

‘‘building codes,’’ ‘‘permitting rules,’’ or 

‘‘requirements’’ that restrict or deny 

housing opportunities or otherwise 

make unavailable or deny dwellings to 

persons because of a protected class is 

prohibited. 

IV. Findings and Certifications 

Regulatory Review—Executive Orders 

13563 and 12866 

Executive Order 13563 (‘‘Improving 

Regulation and Regulatory Review’’) 

directs agencies to propose or adopt a 

regulation only upon a reasoned 

determination that its benefits justify its 

costs, emphasizes the importance of 

quantifying both costs and benefits, of 

harmonizing rules, of promoting 

flexibility, and of periodically reviewing 

existing rules to determine if they can 

be made more effective or less 

burdensome in achieving their 

objectives. Under Executive Order 

12866 (‘‘Regulatory Planning and 

Review’’), a determination must be 

made whether a regulatory action is 

significant and therefore, subject to 

review by the Office of Management and 

Budget (‘‘OMB’’) in accordance with the 

requirements of the order. This 

proposed rule was determined to be a 

‘‘significant regulatory action’’ as 

defined in section 3(f) of Executive 

Order 12866 (although not an 

economically significant regulatory 

action, as provided under section 3(f)(1) 

of the Executive Order). 

Because the 2020 Rule never took 

effect, and therefore did not affect the 

obligations of any regulated entities, this 

proposed rule is only recodifying the 

2013 Rule and will have no impact on 

regulated entities except to affirm that 

the 2013 Rule remains in effect. 

Furthermore, the 2013 Rule itself had 

little direct effect on regulated entities 

because it only ‘‘formalize[d] the 

longstanding interpretation of the Fair 

Housing Act to include discriminatory 

effects liability’’ and ‘‘[was] not a 

significant departure from HUD’s 

interpretation to date or that of the 

majority of federal courts.’’ 76 Therefore, 

HUD does not believe that deeper 

analysis is needed on the impact of this 

rule. However, HUD invites comment 

on this question. 

The docket file is available for public 

inspection in the Regulations Division, 

Office of the General Counsel, Room 

10276, 451 7th Street SW, Washington, 

DC 20410–0500. Due to security 

measures at the HUD Headquarters 

building, please schedule an 

appointment to review the docket file by 

calling the Regulations Division at 202– 

708–3055 (this is not a toll-free 

number). Individuals with speech or 

hearing impairments may access this 

number via TTY by calling the Federal 

Relay Service at 800–877–8339 (this is 

a toll-free number). 

Regulatory Flexibility Act 

The Regulatory Flexibility Act 

(‘‘RFA’’) (5 U.S.C. 601 et seq.) generally 

requires an agency to conduct a 

regulatory flexibility analysis of any rule 

subject to notice and comment 

rulemaking requirements, unless the 

agency certifies that the rule will not 

have a significant economic impact on 

a substantial number of small entities. 

This rule amends the Code of Federal 

Regulations to accurately reflect HUD’s 

discriminatory effects regulation as it 

currently exists. As a result, all entities, 

big and small, have a responsibility to 

comply with the law. 

As discussed above, this Proposed 

Rule would continue to apply the 2013 

Rule, which has been in effect 

uninterrupted for over seven years. HUD 

concludes, as it did when it published 

the 2013 Rule, that the majority of 

entities, large or small, currently comply 

and will remain in compliance with the 

Fair Housing Act. All entities, large and 


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Federal Register / Vol. 86, No. 120 / Friday, June 25, 2021 / Proposed Rules 33597 

small, have been subject to the Fair 

Housing Act for over fifty years and 

subject to the 2013 Rule for over seven 

years. For the minority of entities that 

have failed to institutionalize methods 

to avoid engaging in illegal housing 

discrimination and plan to come into 

compliance as a result of this 

rulemaking, the costs will simply be the 

costs of compliance with a preexisting 

statute and regulation. This proposed 

rule does not change that substantive 

obligation; it merely recodifies the 

regulation that more accurately reflects 

the law. Any burden on small entities is 

simply incidental to the pre-existing 

requirements to comply with this body 

of law. Furthermore, HUD anticipates 

that this Proposed Rule would eliminate 

confusion for all entities, including 

small Fair Housing Advocacy 

organizations, by ensuring HUD’s 

regulation accurately reflects the current 

standards. Accordingly, the undersigned 

certifies that this Proposed Rule would 

not have a significant economic impact 

on a substantial number of small 

entities. HUD invites comments on this 

certification. HUD specifically invites 

comments on the number of small 

entities which commenters believe may 

be affected by this regulation. 

Environmental Impact 

This proposed rule sets forth 

nondiscrimination standards. 

Accordingly, under 24 CFR 50.19(c)(3), 

this rule is categorically excluded from 

environmental review under the 

National Environmental Policy Act of 

1969 (42 U.S.C. 4321). 

Executive Order 13132, Federalism 

Executive Order 13132 (entitled 

‘‘Federalism’’) prohibits an agency from 

publishing any rule that has federalism 

implications if the rule either: (i) 

Imposes substantial direct compliance 

costs on state and local governments 

and is not required by statute, or (ii) 

preempts state law, unless the agency 

meets the consultation and funding 

requirements of section 6 of the 

Executive Order. This proposed rule 

would not have federalism implications 

and would not impose substantial direct 

compliance costs on state and local 

governments or preempt state law 

within the meaning of the Executive 

Order. 

Unfunded Mandates Reform Act 

Title II of the Unfunded Mandates 

Reform Act of 1995 (2 U.S.C. 1531– 

1538) (‘‘UMRA’’) establishes 

requirements for federal agencies to 

assess the effects of their regulatory 

actions on state, local, and tribal 

governments, and on the private sector. 

This proposed rule would not impose 

any federal mandates on any state, local, 

or tribal governments, or on the private 

sector, within the meaning of the 

UMRA. 

List of Subjects in 24 CFR Part 100 

Aged, Civil rights, Fair housing, 

Incorporation by reference, Individuals 

with disabilities, Mortgages, and 

Reporting and recordkeeping 

requirements. 

For the reasons discussed in the 

preamble, HUD proposes to amend 24 

CFR part 100 as follows: 

PART 100—DISCRIMINATORY 

CONDUCT UNDER THE FAIR HOUSING 

ACT 

■ 1. The authority citation for 24 CFR 

part 100 continues to read as follows: 

Authority: 42 U.S.C. 3535(d), 3600–3620. 

Subpart A—General 

■ 2. In § 100.5, revise paragraph (b) and 

remove paragraph (d) to read as follows: 

§ 100.5 Scope. 

* * * * * 

(b) This part provides the 

Department’s interpretation of the 

coverage of the Fair Housing Act 

regarding discrimination related to the 

sale or rental of dwellings, the provision 

of services in connection therewith, and 

the availability of residential real estaterelated transactions. The illustrations of 

unlawful housing discrimination in this 

part may be established by a practice’s 

discriminatory effect, even if not 

motivated by discriminatory intent, 

consistent with the standards outlined 

in § 100.500. 

* * * * * 

Subpart G—Discriminatory Effect 

■ 3. Revise § 100.500 to read as follows: 

§ 100.500 Discriminatory effect prohibited. 

Liability may be established under the 

Fair Housing Act based on a practice’s 

discriminatory effect, as defined in 

paragraph (a) of this section, even if the 

practice was not motivated by a 

discriminatory intent. The practice may 

still be lawful if supported by a legally 

sufficient justification, as defined in 

paragraph (b) of this section. The 

burdens of proof for establishing a 

violation under this subpart are set forth 

in paragraph (c) of this section. 

(a) Discriminatory effect. A practice 

has a discriminatory effect where it 

actually or predictably results in a 

disparate impact on a group of persons 

or creates, increases, reinforces, or 

perpetuates segregated housing patterns 

because of race, color, religion, sex, 

handicap, familial status, or national 

origin. 

(b) Legally sufficient justification. (1) 

A legally sufficient justification exists 

where the challenged practice: 

(i) Is necessary to achieve one or more 

substantial, legitimate, 

nondiscriminatory interests of the 

respondent, with respect to claims 

brought under 42 U.S.C. 3612, or 

defendant, with respect to claims 

brought under 42 U.S.C. 3613 or 3614; 

and 

(ii) Those interests could not be 

served by another practice that has a 

less discriminatory effect. 

(2) A legally sufficient justification 

must be supported by evidence and may 

not be hypothetical or speculative. The 

burdens of proof for establishing each of 

the two elements of a legally sufficient 

justification are set forth in paragraphs 

(c)(2) and (3) of this section. 

(c) Burdens of proof in discriminatory 

effects cases. (1) The charging party, 

with respect to a claim brought under 42 

U.S.C. 3612, or the plaintiff, with 

respect to a claim brought under 42 

U.S.C. 3613 or 3614, has the burden of 

proving that a challenged practice 

caused or predictably will cause a 

discriminatory effect. 

(2) Once the charging party or 

plaintiff satisfies the burden of proof set 

forth in paragraph (c)(1) of this section, 

the respondent or defendant has the 

burden of proving that the challenged 

practice is necessary to achieve one or 

more substantial, legitimate, 

nondiscriminatory interests of the 

respondent or defendant. 

(3) If the respondent or defendant 

satisfies the burden of proof set forth in 

paragraph (c)(2) of this section, the 

charging party or plaintiff may still 

prevail upon proving that the 

substantial, legitimate, 

nondiscriminatory interests supporting 

the challenged practice could be served 

by another practice that has a less 

discriminatory effect. 

(d) Relationship to discriminatory 

intent. A demonstration that a practice 

is supported by a legally sufficient 

justification, as defined in paragraph (b) 

of this section, may not be used as a 

defense against a claim of intentional 

discrimination. 

Dated: June 17, 2021. 

Jeanine Worden, 

Acting Assistant Secretary, Office of Fair 

Housing and Equal Opportunity. 

[FR Doc. 2021–13240 Filed 6–24–21; 8:45 am] 

BILLING CODE 4210–67–P 


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