Fed judge dismisses HUD's 'disparate impact' rule

November 4, 2014

WASHINGTON (11/5/14)--U.S. District Judge Richard Leon threw out a housing regulation issued by the Obama administration involving housing discrimination cases Monday.

According to a report from Reuters, Leon said the Fair Housing Act allows for only direct discrimination claims and not those based on "disparate impact." Leon wrote that the administration's view that the FHA assumes disparate act claims are permitted is "wishful thinking."

The legal theory of disparate impact claims that statistics can be used establish claims of discrimination without proving discriminatory intent. The case arises from the alleged direction of affordable housing tax credits predominantly to a minority area, thereby preventing low-income renters from moving out of poor neighborhoods into affordable housing in a more economically diverse neighborhood.

The U.S. Supreme Court agreed earlier this month to take up a related case, which is likely to decide "once and for all whether the Fair Housing Act allows for disparate impact lawsuits," according to Reuters.