Texas Dept. of Housing and Community Affairs v. Inclusive Communities Project, Inc.
576 U.S. 519
SCOTUS2015Background
- ICP sued the Texas Department of Housing and Community Affairs alleging the allocation of low‑income housing tax credits (via 42(m) plans) had a disparate impact under the FHA.
- Texas law uses a point system for credits, privileging statutorily mandated criteria but allowing state officials to consider additional factors like school quality.
- District Court found a prima facie disparate impact using two statistical datasets and ordered remedial criteria; it did not impose explicit racial quotas.
- HUD issued a 2013 regulation implementing a burden‑shifting disparate‑impact framework under the FHA, influencing post‑remand proceedings.
- Fifth Circuit held disparate‑impact claims cognizable under the FHA but reversed on the merits, remanding for analysis of causation and whether alternative practices exist.
- The Supreme Court granted certiorari to decide whether disparate‑impact claims are cognizable under the FHA, examining text, history, and congressional amendments.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does FHA authorize disparate‑impact claims? | ICP asserts FHA sections 804(a) and 805(a) cover disparate impact. | Department argues FHA prohibits only intentional discrimination; disparate impact is not cognizable. | Yes; disparate‑impact claims are cognizable under the FHA. |
| Did Congress ratify disparate‑impact liability in 1988 amendments? | Congress implicitly endorsed disparate‑impact liability by failing to overturn it and by enacting safe harbors. | Congress did not create disparate‑impact liability; amendments were limited and do not expand liability. | Congress ratified disparate‑impact liability under the FHA. |
| Is there a business‑necessity style defense to FHA disparate impact? | Having to show alternative less discriminatory practices is required; business necessity should limit liability. | HUD framework allows a defense showing the challenged practice serves substantial legitimate nondiscriminatory interests that cannot be met by alternatives. | Court recognizes a limit analogous to business necessity to defend against disparate‑impact liability. |
| Should courts defer to HUD interpretation of the FHA about disparate impact? | HUD interpretation should be given deference as agency expertise. | HUD’s interpretation is not entitled to deference when it rewrites clear statutory terms. | No deference to HUD; the FHA does not authorize disparate‑impact claims under its text. |
Key Cases Cited
- Griggs v. Duke Power Co., 401 U.S. 424 (1971) (disparate‑impact liability with business necessity defense)
- Smith v. City of Jackson, 544 U.S. 228 (2005) (ADEA and disparate impact; textual interpretation)
- Ricci v. DeStefano, 557 U.S. 557 (2009) (emphasizes limits of disparate impact and business necessity)
- Board of Ed. of City School Dist. of New York v. Harris, 444 U.S. 130 (1979) (disparate impact in education context; concurrent reasoning on text)
- Huntington Branch, NAACP v. Huntington, 844 F.2d 926 (2d Cir. 1988) (early‑line endorsement of FHA disparate impact)