# Disparate Impact **Disparate impact** is the principle that a rule can be discriminatory even when nobody meant it to be. A policy that sounds neutral on paper, such as a lender's minimum loan size, a landlord's blanket ban on anyone with a criminal record, or a state's choice of where to build subsidized housing, is unlawful under this theory if it falls much harder on a protected group *and* the organization cannot show it actually needs the policy, or could meet that need another way that does less harm. The plaintiff does not have to prove anyone's motive. The question is what the policy does. ## Why it matters Open, provable bigotry is now rare in housing, lending and hiring. What remains is mostly built into ordinary-looking rules and decisions, and almost none of it can be shown to be intentional. Disparate impact is the main legal tool that reaches it. Remove it, and a great deal of modern discrimination becomes effectively legal, because there is no intent to find. That is why the theory has become one of the most contested ideas in American civil rights law, and why the [[Second Trump Administration]] has made eliminating it an explicit goal. The same intent-versus-effects choice runs through other fields. [[Statistical Discrimination]] explains why effects-based law is the only kind that reaches decisions made on group averages, and [[Louisiana v. Callais]] shows the same shift from effects to intent in voting rights. ## How a disparate-impact case works Under the three-step test HUD wrote into its rules in 2013 and restored in 2023: 1. The challenger shows that a specific practice causes, or predictably will cause, a discriminatory effect. 2. The defendant can then show the practice is needed to achieve a substantial, legitimate, nondiscriminatory interest. 3. The challenger can still win by showing that interest could be met by a less discriminatory alternative. The Supreme Court added guardrails in 2015. A statistical gap alone is not enough. There must be "robust causality" linking the specific policy to the disparity, and only "artificial, arbitrary, and unnecessary barriers" are struck down. ## A short history - **1971: employment.** In [[Griggs v. Duke Power Company]], the Supreme Court held that Title VII of the [[Civil Rights Act of 1964]] barred hiring requirements, such as a high school diploma or an aptitude test, that screened out Black applicants without being related to the job. Congress wrote the standard into Title VII in 1991. - **1970s–1980s: housing.** Every federal appeals court that considered the question held that the [[Fair Housing Act of 1968]] also reached discriminatory effects. When Congress strengthened the Act in the [[Fair Housing Amendments Act of 1988]], it added exemptions that only make sense if effects-based liability existed. - **1988: the counter-claim.** Signing those amendments, [[Ronald Reagan]] said Title VIII "speaks only to intentional discrimination" and that the bill did not endorse finding violations through effects alone. That claim became the legal foundation for later efforts to end the doctrine. - **2013–2023: HUD's rule, three times.** HUD codified its three-step test in February 2013. Under [[Ben Carson]], HUD rewrote it in September 2020 to make claims much harder to bring, but a federal court in Massachusetts blocked that version in October 2020 before it took effect. HUD restored the 2013 standard in March 2023. - **2015: the Supreme Court settles it.** In [[Texas Department of Housing and Community Affairs v. Inclusive Communities Project]], a 5–4 Court led by [[Anthony Kennedy]] held that disparate-impact claims are allowed under the Fair Housing Act. [[Samuel Alito]] wrote the main dissent, arguing the law requires intent. ## The 2025–2026 campaign against it - **April 23, 2025.** [[Executive Order 14281]], "Restoring Equality of Opportunity and Meritocracy," declared it federal policy to "eliminate the use of disparate-impact liability in all contexts to the maximum degree possible." - **September 2025.** HUD's fair housing office was told to put intentional-discrimination cases ahead of disparate-impact cases. HUD also withdrew guidance on tenant screening by criminal record, one of the most common kinds of disparate-impact claim, and barred the state and local agencies it funds from bringing disparate-impact claims. After 16 states and the District of Columbia sued, HUD confirmed in September 2026 that those funding conditions were no longer in effect. - **December 9, 2025.** The [[Department of Justice]], under Attorney General [[Pam Bondi]] and civil rights chief [[Harmeet Dhillon]], removed disparate-impact liability from its rules under Title VI, the law that bars discrimination by recipients of federal money. - **January 14, 2026.** HUD proposed deleting its Fair Housing Act disparate-impact regulation entirely. It cited the executive order and [[Loper Bright v. Raimondo]], arguing that courts, not agencies, should decide what the Act requires, and gave the public 30 days to comment instead of the usual 60. - **April 22, 2026.** The [[CFPB]] finalized a rule removing disparate-impact liability from its lending rules under the [[Equal Credit Opportunity Act]], effective July 21, 2026. - **August 10, 2026.** HUD reopened the proposal and extended it to its own Title VI rules. Comments closed October 9, 2026. As of November 1, 2026, no final rule has been published. ## What removal would and would not do Deleting HUD's regulation would not overturn *Inclusive Communities*. The Supreme Court's holding comes from the statute, so private plaintiffs can still bring disparate-impact claims, and many state laws recognize them independently. What disappears is HUD's written test, HUD's willingness to bring these cases itself, and the predictability that a single national standard gave both landlords and tenants. Courts would be left to work out the standards case by case, with the federal government's lawyers now arguing on the other side. ## Connections - [[Fair Housing Act of 1968]]: the statute where the fight is sharpest right now. - [[Statistical Discrimination]]: why intent-based law cannot reach group-average decisions. - [[Redlining and Housing Discrimination]]: the structural segregation effects-based law was meant to address. - [[Louisiana v. Callais]]: the same intent-versus-effects shift in voting rights. - [[Affirmative Action]]: a different policy that is often confused with disparate impact. Affirmative action takes group membership into account on purpose; disparate impact law tests whether neutral rules work unfairly.