President Trump recently signed an Executive Order entitled “Restoring Equality of Opportunity and Meritocracy“ to eliminate the use of disparate impact liability. The U.S. Department of Housing and Urban Development (HUD) also has indicated that it intends to yet again reconsider its disparate impact rule under the Fair Housing Act.

The Executive Order provides that “[i]t is the policy of the United States to eliminate the use of disparate-impact liability in all contexts to the maximum degree possible to avoid violating the Constitution, Federal civil rights laws, and basic American ideals.” While the Executive Order is not limited to lending or housing, it specifically provides as follows:

“Within 45 days of the date of this order, the Attorney General, the Secretary of Housing and Urban Development, the Director of the Consumer Financial Protection Bureau, the Chair of the Federal Trade Commission, and the heads of other agencies responsible for enforcement of the Equal Credit Opportunity Act (Public Law 93-495), Title VIII of the Civil Rights Act of 1964 (the Fair Housing Act (Public Law 90-284, as amended)), or laws prohibiting unfair, deceptive, or abusive acts or practices shall evaluate all pending proceedings that rely on theories of disparate-impact liability and take appropriate action with respect to such matters consistent with the policy of this order.”

“Within 90 days of the date of this order, all agencies shall evaluate existing consent judgments and permanent injunctions that rely on theories of disparate-impact liability and take appropriate action with respect to such matters consistent with the policy of this order.”

Addressing the existence of fair lending and fair housing provisions in state laws, the Executive Order provides that “[i]n coordination with other agencies, the Attorney General shall determine whether any Federal authorities preempt State laws, regulations, policies, or practices that impose disparate-impact liability based on a federally protected characteristic such as race, sex, or age, or whether such laws, regulations, policies, or practices have constitutional infirmities that warrant Federal action, and shall take appropriate measures consistent with the policy of this order.”

The Executive Order does not address the 2015 ruling of the U.S. Supreme Court in Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, Inc. that disparate impact claims may be brought under the Fair Housing Act. The ruling was 5 to 4, with Justice Kennedy writing the majority opinion and being joined by Justices Ginsburg, Breyer, Sotomayor and Kagan, and with Chief Justice Roberts and Justices Scalia, Thomas, and Alito dissenting.

Separately, in the long standing litigation against the HUD disparate impact rule originally adopted in 2013, with the most recent version being reissued in 2023, HUD has indicated that “as a result of the change in administration on January 20, 2025, HUD is now under new leadership, who have indicated that the agency intends to reconsider the 2023 Rule. HUD officials are continuing to review the 2023 Rule and considering the process for its reconsideration.” A blog post reviewing the tortured history of the rule may be found here.

The developments raise the potential for the issue of whether disparate impact claims may be brought under the Fair Housing Act to be reviewed again by the Supreme Court.