Symposium: An endorsement of forty years of effective fair housing enforcement

Morgan Williams is General Counsel of the National Fair Housing Alliance.

Today’s decision in Texas Department of Housing and Community Affairs v. Inclusive Communities Project broke no new ground.  It simply reaffirmed the consistent finding of the federal courts over the past four decades that the Fair Housing Act bars not only intentional discrimination, but also policies that have an unwarranted disparate impact.  In doing so, the Court’s majority correctly recognized that it was not construing a new law, but rather one with a long and proud history that did not warrant pruning back the law’s coverage so late in the day.

Justice Kennedy’s opinion appropriately begins by locating the Fair Housing Act against the background of this country’s long history of discrimination and segregation.  The Congress that enacted the FHA, in the midst of the civil unrest of 1968, was well aware that the problems it was attacking were (as they remain) deeply rooted in American society.  Accordingly, when enacting the FHA, Congress used language focusing on the results of decision makers’ policies rather than the motivation behind them.

And even if there were any doubt about Congress’s intent in 1968, Justice Kennedy’s opinion makes clear, no such doubt remained after Congress amended the Act in 1988.  Congress knew full well that that all nine appellate courts to consider the question had concluded that disparate impact claims were viable under the original language.  It chose to retain the relevant text and rejected an amendment that would have eliminated disparate impact liability.  Congress even added exemptions to the Act that presuppose the existence of disparate impact liability and would be entirely superfluous without disparate impact.  Thus, as Justice Kennedy recognized, Congress endorsed and ratified the consistent interpretation of the federal courts.

Congress did so for good reason.  In the four decades that the Fair Housing Act has been construed to include disparate impact liability, housing, lending, and insurance markets – once bastions of overt segregation and discrimination – have made important strides toward becoming fair and open to all.  This is not a coincidence.  Disparate impact doctrine has been at the very core of the Act’s success in ending discriminatory housing practices and promoting integration. As Justice Kennedy recognized, the elimination of zoning laws and other housing restrictions that function unfairly against protected groups, and do so without sufficient justification, is “at the heartland” of disparate impact liability and the Fair Housing Act itself.

As Justice Kennedy’s opinion further explains, those who contend that the disparate impact doctrine somehow interferes with entrepreneurship and the proper functioning of the free market have it backwards.  Justice Kennedy notes, for example, that developers who have successfully challenged unnecessary zoning restrictions are now building homes and apartments and providing affordable housing where previously they could not.  He could have cited many other examples of the disparate impact doctrine’s positive economic effect, many of which do not appear in the case law but only have taken place because the doctrine has forced businesses to do their jobs better.

Lenders, for example, have developed lending standards – customized to reflect their unique customer bases – that more accurately and objectively separate qualified from unqualified borrowers.  The result has been that credit markets, though still far from completely fair, are now more open than ever before to those traditionally shut out of credit.  Meanwhile, banks have discovered that these less discriminatory criteria also work better at identifying real risk. The property insurance industry, too, has experienced a similar transformation in its culture.  In response to disparate impact challenges by advocates, insurers have refined their underwriting and pricing systems to eliminate unnecessary, unsupported barriers to the availability of adequate homeowners’ coverage.

The bottom line, as Justice Kennedy’s opinion makes clear, is that disparate impact doctrine imposes neither an undue burden nor surprising obligations, nor does it require regulated entities to impose race-conscious policies.  All entities must do is apply real scrutiny to those policies that limit the availability of housing.  The alternatives they identify when they do so often prove more profitable, or otherwise beneficial to the entity adopting them, as well.  In short, the disparate impact doctrine simply requires that those involved in housing must get smarter in order to be fairer.

As Justice Kennedy’s opinion properly observes, the existence of disparate impact liability over the last several decades “has not given rise to . . . dire consequences,” notwithstanding the overwrought rhetoric of the doctrine’s opponents.  Instead, the disparate impact doctrine has encouraged various entities to take a hard look at unexamined assumptions and think creatively about better solutions.  In doing so, it has unleashed considerable entrepreneurship.  The result is good for business, good for consumers, and good for the economy.  As Justice Kennedy makes clear, those who contend that the disparate impact doctrine somehow requires the institution of racial quotas, or that it prevents public or private entities from fulfilling their legitimate purposes, misunderstand the doctrine.

Rather, the FHA’s disparate impact doctrine merely has ensured that the most disadvantaged members of our society cannot be further victimized by facially neutral laws that exclude them from housing for no good reason. Families can feel more comfortable knowing that their right to housing will not be restricted because they have children.  Women who experience domestic violence can breathe easier knowing that they will not suffer eviction just because they suffered abuse. The predatory lending practices that dumped millions of subprime loans into communities of color will not be allowed.  As Justice Kennedy’s opinion makes clear, the Constitution does not bar either courts or policymakers from taking notice of such injustice and correcting it.