A federal district court in Washington, D.C. dealt a heavy blow on Monday to HUD’s position that disparate impact claims are cognizable under the Fair Housing Act (FHA).  In American Insurance Association v. U.S. Department of Housing and Urban Development, a case we have been watching for some time, the court issued an opinion vacating the HUD disparate impact rule on the ground that “the FHA prohibits disparate treatment only, and that the defendants, therefore, exceeded their authority under the” Administrative Procedure Act.  The court’s concluding admonition – “This is yet another example of an Administrative Agency trying desperately to write into law that which Congress never intended to sanction.” – could just as easily have been directed to the CFPB’s assertion in Bulletin 2013-02 that disparate impact claims are cognizable under the Equal Credit Opportunity Act.  For a detailed discussion of the opinion, see our legal alert.

HUD’s position could soon be dealt a knockout blow by the U.S. Supreme Court.  The issue of whether disparate impact claims are cognizable under the FHA is now before the Supreme Court as a result of the court’s recent grant of the certiorari petition filed by the Texas Department of Housing and Community Affairs in Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, Inc.  Should the court finally get the opportunity to rule on the merits (having been denied that opportunity twice before), it is widely expected to reach the same conclusion as that reached by the Washington, D.C. district court.