The Fair Housing Act (FHA) was enacted "to provide, within constitutional limitations, for fair housing throughout the United States." It prohibits discrimination on the basis of race, color, religion, national origin, sex, physical and mental handicap, and familial status. Subject to certain exemptions, the FHA applies to all sorts of housing, public and private, including single family homes, apartments, condominiums, and mobile homes. It also applies to "residential real estate-related transactions," which include both the "making [and] purchasing of loans ... secured by residential real estate [and] the selling, brokering, or appraising of residential real property." In June 2015, the Supreme Court, in Texas Department of Housing Community Affairs v. Inclusive Communities Project , confirmed the long-held interpretation that, in addition to outlawing intentional discrimination, the FHA also prohibits certain housing-related decisions that have a discriminatory effect on a protected class. Historically, courts have generally recognized two types of disparate impacts resulting from "facially neutral decision[s]" that can result in liability under the FHA. The first occurs when that decision has a greater adverse impact on one [protected] 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. The Supreme Court's holding in Inclusive Communities that "disparate-impact claims are cognizable under the [FHA]" mirrors previous interpretations of the Department of Housing and Urban Development (HUD) and all 11 federal courts of appeals that had ruled on the issue. However, as discussed further below, HUD and the 11 courts of appeals have not all applied the same criteria for determining when a neutral policy that causes a disparate impact violates the FHA. In a stated attempt to harmonize disparate impact analysis across the country, HUD finalized regulations in 2013 that established uniform standards for determining when such practices violate the act. The Inclusive Communities Court did not expressly adopt the standards established in HUD's disparate impact regulations. Rather, the Court adopted a three-step burden-shifting test that has some similarities with these standards. In addition, the Court outlined a number of limiting factors that lower courts and HUD should apply when assessing disparate impact claims. It likely will take years to gain a strong understanding of how the Inclusive Communities decision will affect future disparate impact litigation under the FHA (and other laws such as Title VII of the Civil Rights Act of 1964). While plaintiffs historically have faced fairly steep odds of getting their disparate impact claims past the preliminary stages of litigation, much less succeeding on the merits of those claims, it is possible that the "cautionary standards" stressed by the Inclusive Communities majority might result in even fewer successful disparate impact claims and swifter disposal of claims that are raised. This report provides an overview of how the lower courts and HUD evaluated allegations of discriminatory effects before the Supreme Court's Inclusive Communities decision. This discussion is followed by an assessment of Inclusive Communities and an analysis of the potential implications of the Court's ruling. As noted, all of the circuit courts of appeals that had previously addressed the issue held that disparate impact claims are cognizable under the FHA. The U.S. Court of Appeals for the Seventh Circuit, for example, reasoned that "a requirement that the plaintiff prove discriminatory intent before relief can be granted under the statute is often a burden that is impossible to satisfy.... A strict focus on intent permits racial discrimination to go unpunished in the absence of evidence of overt bigotry ... [which] has become harder to find." The Seventh Circuit went on to explain that interpreting the FHA so narrowly as to allow systematic discrimination in housing simply because it is done "discreetly" would be counter to congressional intent, and "[w]e therefore hold that at least under some circumstances a violation of section 3604(a) can be established by a showing of discriminatory effect without a showing of discriminatory intent." Beyond agreement that disparate impact claims are cognizable, a number of other commonalities existed among the circuits before the Inclusive Communities ruling. For example, courts typically looked to Title VII disparate impact cases in the employment context for guidance in FHA-based claims (and vice versa ). Additionally, there was general agreement among the circuits that plaintiffs must rely on more than a mere statistical anomaly to make a prima facie showing of a discriminatory effect. The Seventh Circuit, for instance, explained that "we refuse to conclude that every action which produces discriminatory effects is illegal. Such a per se rule would go beyond the intent of Congress and would lead courts into untenable results in specific cases." The circuits generally agreed that plaintiffs must provide causal evidence—that is, evidence showing that a particular practice caused the disparity on a protected class. Another important common feature prior to Inclusive Communities is that plaintiffs were rarely successful with disparate impact claims, at least at the appellate level. Rather, it appears that most of the plaintiffs' disparate impact claims that were reviewed by federal courts of appeals were dismissed in preliminary stages of litigation before trials. One scholar, who conducted a qualitative analysis of the 92 cases in which a federal court of appeals made a substantive ruling on an FHA disparate impact claim from 1971 (when the Supreme Court, in Griggs v. Duke Power , first held that disparate impact claims were cognizable under Title VII) through June 2013, found that plaintiffs obtained "positive outcomes" in only 18 cases (i.e., 19.5% of the cases); most of the cases (64 of 92 or 69.6%) were decided by the appellate courts before trials at the preliminary stages (i.e., pleading, summary judgment, or preliminary injunction) of litigation; district court rulings in favor of plaintiffs were reversed by the appellate courts two-thirds of the time (12 of 18 decisions), in spite of the fact that it is estimated that lower courts are generally affirmed approximately 80% of the time; and lower court rulings in favor of defendants were only reversed by the appellate courts 12 times out of 74 cases (i.e., 16.2% of the cases). As a result, the scholar concluded that, [w]hatever has prompted the Court's sudden interest in examining the question of disparate impact liability under the FHA [ i.e. , by granting certiorari in disparate impact cases in two successive terms], this interest cannot be attributable to plaintiffs' high rate of success or the appellate courts' general unwillingness to impose a rigorous and exacting review of the claims at every stage of the proceedings. While commonalities did exist, the courts did not agree on every aspect of disparate impact analysis. Importantly, the courts were not in agreement as to how to determine if a discriminatory effect violates the act. The First, Second, Third, Fifth, Eighth, and Ninth Circuit Courts of Appeals generally applied burden-shifting tests to assess the validity of a disparate impact claim pursuant to the FHA. Yet there were some differences in the tests applied, even among the courts that applied burden-shifting schemes. For example, all courts that used burden-shifting tests agreed that the burden is initially on the plaintiff to make a prima facie showing, generally with the use of statistics, that a specific policy results in a disparate impact upon a protected class, and that, upon such a showing, the burden shifts to the defendant to show that the policy was initiated for some nondiscriminatory, legitimate purpose. From there, most of these courts shifted the burden to the plaintiff to submit proof of a viable, less discriminatory alternative. The Second Circuit, on the other hand, upon a defendant's showing of a nondiscriminatory, legitimate purpose, kept the onus on the defendant to show there is not a less discriminatory alternative that would allow the defendant to meet the same legitimate purpose. Rather than the three-step burden-shifting test, the Seventh Circuit historically applied a four-factor balancing test originally set out in the Village of Arlington Heights decision. These factors are (1) [the] strength of the plaintiff's statistical showing; (2) the legitimacy of the defendant's interest in taking the action complained of; (3) some indication—which might be suggestive rather than conclusive—of discriminatory intent; and (4) the extent to which relief could be obtained by limiting interference by, rather than requiring positive remedial measures of, the defendant. The Sixth and Tenth Circuit Courts of Appeals applied hybrid approaches using elements from both the Seventh Circuit's balancing test and a burden-shifting framework. The Fourth Circuit applied a burden-shifting test when the defendant was a private party, but applied the four-factor balancing test with public defendants. Finally, the Eleventh Circuit has explained that "[a] showing of a significant discriminatory effect suffices to demonstrate a prima facie violation of the Fair Housing Act" but the plaintiff must also establish evidence of causality—"A plaintiff can demonstrate a discriminatory effect in two ways: it can demonstrate that the decision has a segregative effect or that it makes housing options significantly more restrictive for members of a protected group than for persons outside that group." For approximately two decades, through internal adjudicatory proceedings, appeals of those proceedings to federal courts, policy guidance, and other means, HUD has interpreted the FHA as supporting disparate impact claims. The agency did not formally adopt the policy through regulations until February 2013. HUD explained in the preamble of the Implementation of the Fair Housing Act's Discriminatory Effects Standard Final Rule (the Rule or the Disparate Impact Rule) that "[t]his regulation is needed to formalize HUD's long-held interpretation of the availability of 'discriminatory effects' liability under the Fair Housing Act and to provide nationwide consistency in the application of that form of liability."