The Magazine

Rein in HUD

Jan 27, 2014, Vol. 19, No. 19 • By TERRY EASTLAND
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Significantly, both settlements were driven by parties fearful that the Supreme Court would decide that disparate impact claims are not permitted under the FHA. In the first case, Magner v. Gallagher, administration officials, with help from the civil rights lobby, negotiated the settlement, which was reached in early 2012. Congressional investigations ensued, but were of little consequence. Yet the unusual and fiercely determined deal-making led by Thomas Perez, then head of the Justice Department’s Civil Rights Division, illustrated the lengths to which the administration was willing to go to protect its cherished legal theory. Perez was promoted to labor secretary last summer.

The administration tried to persuade the Court not to take the second case, Township of Mount Holly, New Jersey v. Mount Holly Gardens Citizens in Action. The solicitor general argued that the justices should wait to see how the new disparate impact rule fares in the lower courts. The justices rejected that counsel and accepted the case, only to see it go the way of Magner, with settlement (this past November) on the eve of oral argument, followed by removal from the Court.

While there has been no evidence (so far) that the administration played a direct role in making Mount Holly disappear, its allies in the philanthropic and housing communities did. As the Wall Street Journal reported, the Ford Foundation, George Soros’s Open Society Foundations, the National Fair Housing Alliance, and Self-Help Community Development were among the entities that contributed money to TRF Development Partners, another administration ally, to build new homes for those who brought the case as well as other private buyers.

With the American Insurance Association and National Association of Mutual Insurance Companies lawsuit, there is now a third challenge to disparate impact in housing that could make its way to the Supreme Court during the Obama presidency. While we would be eager to know whether administration officials and their disparate impact allies are dialing up the folks at AIA and NAMIC, hoping to find a way to take the case from the judiciary, the plaintiffs are serious about the issue and not likely to quit their complaint prematurely.

And let’s hope they don’t. And that the Court, in the AIA case or one like it not yet on the horizon, reads the FHA correctly and decides that disparate impact claims are not authorized by the law. 

In that event, those who favor disparate impact in housing would, of course, be free to go to Congress and try to persuade it to enact what is, on the merits, a highly controversial policy. Were that to happen, our government of separated powers would be working properly. As it is now, we have an agency that’s acting in excess of its delegated power.

It’s time—past time, really—to rein it in.

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