[Federal Register Volume 80, Number 203 (Wednesday, October 21, 2015)]
[Proposed Rules]
[Pages 63720-63731]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-26587]



[[Page 63720]]

=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 100

[Docket No. FR-5248-P-01]
RIN 2529-AA94


Quid Pro Quo and Hostile Environment Harassment and Liability for 
Discriminatory Housing Practices Under the Fair Housing Act

AGENCY: Office of the Assistant Secretary for Fair Housing and Equal 
Opportunity, HUD.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: Through this rule, HUD proposes to amend its fair housing 
regulations to formalize standards for use in investigations and 
adjudications involving alleged harassment on the basis of race, color, 
religion, national origin, sex, familial status or disability under the 
Fair Housing Act. The proposed standards would specify how HUD would 
evaluate complaints of quid pro quo (``this for that'') harassment and 
hostile environment harassment and provide for uniform treatment of 
Fair Housing Act claims raising such allegations in the federal courts. 
This proposed rule defines ``quid pro quo'' and ``hostile environment 
harassment,'' as prohibited under the Fair Housing Act, and adds 
illustrations of discriminatory housing practices that constitute such 
harassment. In addition, the proposed rule clarifies the operation of 
traditional principles of direct and vicarious liability under the Fair 
Housing Act.

DATES: Comment Due Date: December 21, 2015.

ADDRESSES: Interested persons are invited to submit comments regarding 
this proposed rule to the Regulations Division, Office of General 
Counsel, 451 7th Street SW., Room 10276, Department of Housing and 
Urban Development, Washington, DC 20410-0500. Communications must refer 
to the above docket number and title. There are two methods for 
submitting public comments. All submissions must refer to the above 
docket number and title.
    1. Submission of Comments by Mail. Comments may be submitted by 
mail to the Regulations Division, Office of General Counsel, Department 
of Housing and Urban Development, 451 7th Street SW., Room 10276, 
Washington, DC 20410-0500.
    2. Electronic Submission of Comments. Interested persons may submit 
comments electronically through the Federal eRulemaking Portal at 
www.regulations.gov. HUD strongly encourages commenters to submit 
comments electronically. Electronic submission of comments allows the 
commenter maximum time to prepare and submit a comment, ensures timely 
receipt by HUD, and enables HUD to make them immediately available to 
the public. Comments submitted electronically through the 
www.regulations.gov Web site can be viewed by other commenters and 
interested members of the public. Commenters should follow the 
instructions provided on that site to submit comments electronically.

    Note: To receive consideration as public comments, comments must 
be submitted through one of the two methods specified above. Again, 
all submissions must refer to the docket number and title of the 
rule.

    No Facsimile Comments. Facsimile (fax) comments are not acceptable.
    Public Inspection of Public Comments. All properly submitted 
comments and communications submitted to HUD will be available for 
public inspection and copying between 8 a.m. and 5 p.m. weekdays at the 
above address. Due to security measures at the HUD Headquarters 
building, an advance appointment to review the public comments must be 
scheduled by calling the Regulations Division at 202-708-3055 (this is 
not a toll-free number). Individuals who are deaf, are hard of hearing, 
or have speech impairments may access this number through TTY by 
calling the Federal Relay Service at 800-877-8339. Copies of all 
comments submitted are available for inspection and downloading at 
www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Lynn Grosso, Acting Deputy Assistant 
Secretary for Enforcement and Programs, Office of Fair Housing and 
Equal Opportunity, Department of Housing and Urban Development, 451 
Seventh Street SW., Room 5204, Washington, DC 20410-2000; telephone 
number 202-402-5361 (this is not a toll-free number). Persons with 
hearing or speech impairments may contact this number via TTY by 
calling the toll-free Federal Relay Service at 800-877-8339.

SUPPLEMENTARY INFORMATION: 

I. Executive Summary

A. Purpose of the Regulatory Action

    Need for the Regulation. A regulation is needed to formalize the 
standards for investigations and adjudications under the Fair Housing 
Act (Fair Housing Act or Act) involving alleged harassment. Both HUD 
and the courts have long recognized that the Fair Housing Act prohibits 
harassment in housing and housing-related transactions because of race, 
color, religion, sex, national origin, disability \1\ and familial 
status, just as Title VII of the Civil Rights Act (42 U.S.C. 2000e et 
se.) prohibits such harassment in employment. However, to date, no 
standards have been formalized for assessing claims of harassment under 
the Fair Housing Act. Courts have often applied standards first adopted 
under Title VII to evaluate claims of harassment under the Fair Housing 
Act, but such standards are not always the most suitable for assessing 
claims of harassment in housing discrimination cases given the 
differences between harassment in the workplace and harassment in or 
around one's home. Therefore, this rule proposes to formalize standards 
determined to be appropriate for evaluating claims of quid pro quo and 
hostile environment harassment in the housing context and provides some 
examples of their application.
---------------------------------------------------------------------------

    \1\ This rule uses the term ``disability'' to refer to what the 
Fair Housing Act and its implementing regulations refer to as a 
``handicap.'' Both terms have the same legal meaning. See Bragdon v. 
Abbott, 524 U.S. 624, 631 (1998).
---------------------------------------------------------------------------

    In addition to formalizing standards for assessing claims of 
harassment under the Fair Housing Act, a regulation is needed to 
clarify when housing providers and other covered entities or 
individuals may be held directly or vicariously liable under the Act 
for illegal harassment or other discriminatory housing practices. HUD 
proposes to set forth by regulation how these traditional liability 
standards apply in the housing context because, in HUD's experience, 
there is significant misunderstanding among public and private housing 
providers as to the circumstances under which they will be subject to 
liability under the Fair Housing Act for discriminatory housing 
practices undertaken by others.
    How the Rule Meets the Need. This proposed rule meets the need 
described above by formalizing and providing uniform standards for 
evaluating complaints of quid pro quo and hostile environment 
harassment under the Fair Housing Act. The rule does so by defining 
``quid pro quo'' and ``hostile environment harassment'' as conduct 
prohibited under the Act, describing the types of conduct that may 
establish a claim of either type of harassment, and specifying the 
factors to be considered when evaluating whether particular conduct 
creates a hostile environment in violation of the Act. Such standards 
would apply both in administrative adjudications under the Act and in 
Fair Housing Act cases brought in federal and state courts. This 
proposed rule also

[[Page 63721]]

meets the need for regulatory action by adding to HUD's existing Fair 
Housing Act regulations illustrations of discriminatory housing 
practices that constitute illegal quid pro quo and hostile environment 
harassment. By establishing consistent standards for evaluating claims 
of quid pro quo and hostile environment harassment, this proposed rule 
would provide guidance to providers of housing or housing-related 
services seeking to ensure that their properties or businesses are free 
of unlawful harassment. The rule also strives to provide clarity to 
victims of harassment and their representatives as to how to assess 
potential claims of illegal harassment under the Act. Finally, this 
proposed regulation describes direct and vicarious liability under the 
Fair Housing Act, thereby providing both aggrieved persons and housing 
providers with guidance as to when a party may be held liable for 
specific discriminatory acts or practices.
    Legal Authority for the Regulation. The legal authority for this 
regulation is found in the Fair Housing Act. Specifically, section 
808(a) of the Act gives the Secretary of HUD the ``authority and 
responsibility for administering this Act.'' 42 U.S.C. 3608(a). In 
addition, section 815 of the Act provides that ``[t]he Secretary may 
make rules (including rules for the collection, maintenance, and 
analysis of appropriate data) to carry out this title. The Secretary 
shall give public notice and opportunity for comment with respect to 
all rules made under this section.'' 42 U.S.C. 3614a. HUD also has 
general rulemaking authority, under the Department of Housing and Urban 
Development Act, to make such rules and regulations as may be necessary 
to carry out its functions, powers, and duties. See 42 U.S.C. 3535(d).

B. Summary of Major Provisions

    This rule proposes to codify through regulation the principles that 
quid pro quo and hostile environment harassment on the basis of race, 
color, national origin, religion, sex, disability or familial status 
(``protected characteristic'') violate one or more provisions of the 
Fair Housing Act. As noted above, the proposed rule would define ``quid 
pro quo'' and ``hostile environment'' harassment under the Fair Housing 
Act, add illustrations of prohibited ``quid pro quo'' and ``hostile 
environment'' harassment, and address how the traditional standards for 
direct and vicarious liability operate in the Fair Housing Act context, 
including for claims of harassment.
    As proposed to be defined, ``quid pro quo harassment'' occurs when 
a person is subjected to an unwelcome request or demand because of the 
person's protected characteristic and submission to the request or 
demand is, either explicitly or implicitly, made a condition related to 
the person's housing. A person's conduct may constitute quid pro quo 
harassment even where the victim acquiesces or submits to the unwelcome 
request or demand.
    As proposed to be defined, ``hostile environment harassment'' 
occurs when, because of a protected characteristic, a person is 
subjected to unwelcome conduct that is sufficiently severe or pervasive 
such that it interferes with or deprives the victim of his or her right 
to use and enjoy the housing or to exercise other rights protected by 
the Act. The proposed rule further explains that whether a hostile 
environment has been created requires an assessment of the totality of 
the circumstances, which includes, but is not limited to, the nature of 
the conduct; the context in which the conduct occurred; the severity, 
scope, frequency, duration, and location of the incident(s); and the 
relationships of the persons involved.
    For purposes of clarity and guidance, the proposed rule would add 
to HUD's existing Fair Housing Act regulations examples of prohibited 
quid pro quo and hostile environment harassment under the Act.
    The proposed rule also would describe ``direct liability'' and 
``vicarious liability'' as applied to all violations under the Act, not 
solely harassment. The standards for both types of liability 
incorporated into the proposed rule follow well-established common law 
tort and agency principles and do not subject respondents or defendants 
to enhanced liability for violations of the Act. Under such standards, 
a person is directly liable for his or her own discriminatory housing 
practices and, in certain circumstances, is directly liable for actions 
taken by others, including agents, when the person knew or should have 
known of the discriminatory conduct and failed to take prompt 
corrective action that ends it. The proposed rule would also clarify 
that direct liability for the actions of non-agents occurs only when a 
person fails to fulfill a duty to take prompt action to correct and end 
a non-agent's discriminatory conduct, of which the person knew or 
should have known.
    In contrast to direct liability for the conduct of another, a 
person may be vicariously liable for the conduct of his or her agents 
regardless of whether the person knew of or intended the wrongful 
conduct or was negligent in preventing the conduct from occurring.\2\ 
Vicarious liability occurs when the discriminatory actions of the agent 
are taken within the scope of the agency relationship, or are committed 
outside the scope of the agency relationship but the agent was aided in 
the commission of such acts by the existence of the agency 
relationship. To clarify the distinction between these two forms of 
liability--direct and vicarious--without codifying specific common law 
liability standards, the proposed rule simply adds a provision stating 
that a person may be vicariously liable for the discriminatory acts of 
his or her agent. This provision is consistent with the holding of 
Meyer v. Holley, 537 U.S. 280, 285-289 (2003) that traditional 
principles of agency law apply in fair housing cases.\3\
---------------------------------------------------------------------------

    \2\ An agency relationship is created by contract or by law. 
Generally, an agency relationship is an arrangement in which one 
entity or person (the principal) appoints another (the agent) to act 
on its behalf. However, this proposed rule does not purport to 
define what constitutes an agency relationship.
    \3\ See also, e.g., Boswell v. Gumbaytay, 2009 WL 1515872, *3 
(M.D. Ala. 2009) (discussing vicarious liability of property 
management companies); Glover v. Jones, 522 F. Supp. 2d 496, 506-08 
(W.D.N.Y. 2007) (property management company can be vicariously 
liable for sexual harassment); Williams v. Poretsky Mgmt., 955 F. 
Supp. 490, 496 (D. Md. 1996) (rental company may be liable for 
employee's sexual harassment of tenant).
---------------------------------------------------------------------------

C. Costs and Benefits

    Because the rule does not add any new forms of liability under the 
Act, but rather formalizes clear, consistent, nationwide standards for 
evaluating harassment cases under the Fair Housing Act, the rule adds 
no additional costs to housing providers and others engaged in housing 
transactions. Rather, the rule will assist in ensuring compliance with 
the Act by defining quid pro quo and hostile environment harassment 
that violates the Act and by specifying traditional tort and agency law 
standards for assessing direct and vicarious liability, consistent with 
Supreme Court precedent. Articulating clear standards enables entities 
subject to the Act's prohibitions and persons protected by its terms to 
understand the types of conduct that constitute actionable quid pro quo 
and hostile environment harassment under the Act. This should 
facilitate more effective training to avoid discriminatory harassment 
in housing and should decrease the need for protracted litigation to 
resolve disputed claims.

II. Background

    Title VIII of the Civil Rights Act of 1968, as amended (the Fair 
Housing

[[Page 63722]]

Act), prohibits discrimination in the availability and enjoyment of 
housing and housing-related services, facilities, transactions and 
brokerage businesses because of race, color, national origin, religion, 
sex, disability and familial status. 42 U.S.C. 3601-19. The Act 
contains broad prohibitions against discrimination because of a 
protected characteristic. See 42 U.S.C. 3604, 3605, 3606 and 3617. 
These provisions prohibit, among other things, discriminatory 
statements, refusals to rent or sell, denying access to services, 
setting different terms and conditions, refusing to make reasonable 
modifications and accommodations, discriminating in residential real 
estate transactions, and retaliation.
    In 1989, HUD promulgated fair housing regulations at 24 CFR part 
100 that address discriminatory conduct in housing generally. The 1989 
regulations include examples of discriminatory housing practices that 
have been interpreted to cover quid pro quo sexual harassment and 
hostile environment harassment generally. Section 100.65(b)(5) 
identifies, as an example of unlawful conduct, denying or limiting 
housing-related services or facilities because a person refused to 
provide sexual favors. Section 100.400(c)(2) offers as an example of 
illegal conduct ``. . . interfering with persons in their enjoyment of 
a dwelling because of race, color, religion, sex, disability, familial 
status, or national origin of such persons, or of visitors or 
associates of such persons.'' The 1989 regulations do not, however, 
define quid pro quo or hostile environment harassment, specify 
standards for examining such claims, or provide illustrations of other 
types of quid pro quo or hostile environment harassment prohibited by 
the Act. Nor do the 1989 regulations discuss liability standards for 
prohibited harassment or other discriminatory housing practices.
    On November 13, 2000, HUD published a proposed rule entitled 
``Proposed Fair Housing Act Regulations Amendment Standards Governing 
Sexual Harassment Cases'' (65 FR 67666) seeking comment on standards to 
be used in evaluating sexual harassment complaints. HUD never issued 
final regulations pursuant to that proposed rule. Because this proposed 
rule addresses harassment more broadly, based on any characteristic 
protected by the Act and not solely because of sex, this proposed rule 
is not a continuation of the 2000 rulemaking.
    Over time, forms of harassment that violate the civil rights laws 
have coalesced into two legal doctrines--quid pro quo and hostile 
environment. Although HUD and the courts have recognized that the Fair 
Housing Act prohibits harassment because of race or color,\4\ 
disability,\5\ religion,\6\ national origin,\7\ familial status,\8\ and 
sex,\9\ the doctrines of quid pro quo and hostile environment 
harassment are not well developed under the Fair Housing Act.
---------------------------------------------------------------------------

    \4\ See, e.g., Smith v. Mission Assoc. Ltd. P'ship, 225 F. Supp. 
2d 1293, 1298-99 (D. Kan. 2002) (42 U.S.C. 3604(b)); HUD v. Tucker, 
2002 WL 31018606, *3-4 (HUD ALJ 2002) (42 U.S.C. 3604(a) and (b)).
    \5\ See, e.g., Neudecker v. Boisclair Corp., 351 F. 3d 361, 364 
(8th Cir. 2003) (42 U.S.C. 3604(f)(2)).
    \6\ See, e.g., Bloch v. Frischholz, 587 F. 3d 771, 787 (7th Cir. 
2009) (42 U.S.C. 3604, 3617).
    \7\ See, e.g., Effendi v. Amber Fields Homeowners Assoc., 2011 
U.S. Dist. Lexis 35265, *1 (N.D. Ill. 2011) (42 U.S.C. 3604(b) and 
3617); Texas v. Crest Asset Mgmt., 85 F. Supp. 722, 736 (S.D. TX 
2000) (42 U.S.C. 3604(a) and (b), 3617).
    \8\ See, e.g., Bischoff v. Brittain, 2014 U.S. Dist. LEXIS 
145945, *13-14, *17 (E.D. Cal. 2014) (3604(b)); United States v. M. 
Westland Co., 1995 U.S. Dist. LEXIS 22466, *4 (C.D. Cal. 1995) (Fair 
Housing Act provision not specified).
    \9\ See, e.g., Quigley v. Winter, 598 F. 3d 938, 946 (8th Cir. 
2010) (42 U.S.C. 3617); Krueger v. Cuomo, 115 F. 3d 487, 491 (7th 
Cir. 1997) (42 U.S.C. 3604, 3617); Honce v. Vigil, 1 F. 3d 1085, 
1088 (10th Cir. 1993) (42 U.S.C. 3604(b)); Shellhammer v. Lewallen, 
770 F. 2d 167 (6th Cir. 1985) (sexual harassment under the Fair 
Housing Act in general).
---------------------------------------------------------------------------

    To date, when deciding harassment cases, courts have often looked 
to case law decided under Title VII of the Civil Rights Act of 1964 (42 
U.S.C. 2000 et se.) (Title VII), which prohibits employment 
discrimination because of race, color, religion, sex and national 
origin.\10\ But the home and the workplace are significantly different 
environments such that strict reliance on Title VII case law is not 
always appropriate. One's home is a place of privacy, security, and 
refuge (or should be), and harassment that occurs in or around one's 
home can be far more intrusive, violative, and threatening than 
harassment in the more public environment of one's work place.\11\ 
Moreover, as discussed below, the Supreme Court has historically 
recognized that individuals have heightened rights within the home for 
privacy and freedom from unwelcome speech, among other things.\12\
---------------------------------------------------------------------------

    \10\ See, e.g., Honce v. Vigil, 1 F. 3d 1085, 1088 (10th Cir. 
1993); Shellhammer v. Lewallen, 770 F. 2d 167 (6th Cir. 1985); 
Glover v. Jones, 522 F. Supp. 2d 496, 503 (W.D.N.Y. 2007); Beliveau 
v. Caras, 873 F. Supp. 1393, 1396 (C.D. Cal. 1995); see also 
Neudecker v. Boisclair Corp., 351 F. 3d 361, 364 (8th Cir. 2003) 
(applying Title VII concepts to find hostile environment based on 
disability violated Act). Unlike Title VII, Title VIII also includes 
disability and familial status among its protected characteristics.
    \11\ See, e.g., Quigley v. Winter, 598 F. 3d 938, 947 (8th Cir. 
2010) (emphasizing that defendant's harassing conduct was made 
``even more egregious'' by the fact that it occurred in plaintiff's 
home, ``a place where [she] was entitled to feel safe and secure and 
need not flee.''); Salisbury v. Hickman, 974 F. Supp. 2d 1282, 1292 
(E.D. Cal. 2013) (``[c]ourts have recognized that harassment in 
one's own home is particularly egregious and is a factor that must 
be considered in determining the seriousness of the alleged 
harassment''); Williams v. Poretsky Management, 955 F. Supp. 490, 
498 (D. Md. 1996) (noting sexual harassment in the home more severe 
than in workplace); Beliveau v. Caras, 873 F. Supp. 1393, 1398 (C.D. 
Cal. 1995) (describing home as place where one should be safe and 
not vulnerable to sexual harassment); D. Benjamin Barros, Home As a 
Legal Concept, 46 Santa Clara L. Rev. 255, 277-82 (2006) (discussing 
legal concept of home as source of security, liberty and privacy 
which justifies favored legal status in many circumstances); Nicole 
A. Forkenbrock Lindemyer, Article, Sexual Harassment on the Second 
Shift: The Misfit Application of Title VII Employment Standards to 
Title VIII Housing Cases, 18 Law & Ineq. 351, 368-80 (2000) (noting 
that transporting of Title VII workplace standards for sexual 
harassment into Fair Housing Act cases of residential sexual 
harassment ignores important distinctions between the two settings); 
Michelle Adams, Knowing Your Place: Theorizing Sexual Harassment at 
Home, 40 Ariz. L. Rev. 17, 21-28 (1998) (describing destabilizing 
effect of sexual harassment in the home).
    \12\ See e.g. Frisby v. Schultz, 487 U.S. 474, 484 (1988) 
(``[w]e have repeatedly held that individuals are not required to 
welcome unwanted speech into their own homes and that the government 
may protect this freedom'').
---------------------------------------------------------------------------

    Therefore, this proposed rule would provide regulations to address 
specifically harassment in one's home and would make clear the 
differences between quid pro quo and hostile environment harassment in 
the home and in the work place. While Title VII and Fair Housing Act 
case law contain many similar concepts, this proposed regulation 
describes the appropriate analytical framework for harassment claims 
under the Fair Housing Act.
    The proposed rule addresses only quid pro quo and hostile 
environment harassment, and not conduct generically referred to as 
harassment that, for different reasons, may violate section 818 or 
other provisions of the Act. For example, a racially hostile statement 
by a housing provider to a tenant could indicate a discriminatory 
preference in violation of section 804(c) of the Act, or it could 
evidence intent to deny housing or discriminate in the terms or 
conditions of housing under sections 804(a) or 804(b), even if the 
statement does not create a hostile environment or establish a quid pro 
quo. Section 818, which makes it unlawful to ``coerce, intimidate, 
threaten, or interfere with any person in the exercise or enjoyment 
of'' rights protected by the Act, or on account of a person having 
aided others in exercising or enjoying rights protected by the Act, 
could be violated by conduct that creates a quid pro quo or hostile 
environment, or by other conduct that constitutes retaliation or 
another form of coercion, intimidation, threats, or interference 
because of a protected characteristic.\13\ Section 818

[[Page 63723]]

prohibits quid pro quo or hostile environment harassment, but is not 
limited to quid pro quo or hostile environment claims. In addition, the 
same discriminatory conduct could violate more than one provision of 
the Act.\14\
---------------------------------------------------------------------------

    \13\ A violation of section 818 may be established by the 
standards for quid pro quo or hostile environment harassment set out 
in the rule or by the elements of a section 818 violation based on 
other types of unlawful coercion, intimidation, threats, or 
interference. The elements of a section 818 violation based on these 
other types of unlawful conduct mirror its language: (i) Plaintiff 
or complainant exercised or enjoyed a right guaranteed by 42 U.S.C. 
3603-3606; (2) defendant's or respondent's conduct constituted 
coercion, intimidation, a threat, or interference; and (3) a causal 
connection exists between the exercise or enjoyment of a right and 
defendant's or respondent's conduct. See, e.g., Bloch v. Frischholz, 
587 F. 3d 771, 783 (7th Cir. 2009); Hood v. Midwest Sav. Bank, 95 
Fed. Appx. 768, 779 (6th Cir. 2004); Nguyen v. Patek, 2014 U.S. 
Dist. LEXIS 147295, *7-8 (N.D. Ill. 2014) (denying motion to dismiss 
where Vietnamese-American plaintiffs alleged white neighbors 
interfered with enjoyment of their housing rights by subjecting them 
to pattern of race and national origin harassment); Wells v. Rhodes, 
928 F. Supp. 2d 920, 933 (S.D. OH. 2013) (granting plaintiffs' 
motion for summary judgment because a reasonable jury could conclude 
that ``burning a cross on Plaintiffs' front lawn, with `KKK will 
make you pay' and the N-word written on it, is certainly 
interference (or perhaps more accurately a threat or intimidation) 
within the broad meaning of Sec.  3617''); Ohana v. 180 Prospect 
Place Realty, 996 F. Supp. 238, 243 (E.D.N.Y. 1998) (denying 
defendants' motion to dismiss where defendants interfered with 
plaintiffs' quietude by making racial and anti-Jewish slurs and 
epithets, threats of bodily harm, and noise disturbances). See also 
Robert G. Schwemm, Neighbor-on-Neighbor Harassment: Does the Fair 
Housing Act Make a Federal Case Out of It?, 61 Case W. Res. L. Rev. 
865 (2011).
    \14\ See 24 CFR 100.50(a).
---------------------------------------------------------------------------

    In sum, this proposed rule would provide standards that are 
uniformly applicable to claims of quid pro quo and hostile environment 
harassment under the Fair Housing Act, regardless of the section of the 
Act that is alleged to have been violated. These standards would be 
useful to victims of harassment as well as housing providers seeking to 
ensure their properties are free of illegal harassment. The proposed 
rule also provides HUD investigators and administrative law judges, 
other government agencies, and courts with the appropriate standards to 
be applied to claims of quid pro quo and hostile environment harassment 
in the housing context.

III. This Proposed Rule

    This proposed rule would amend 24 CFR part 100 to establish a new 
subpart H, entitled ``Quid Pro Quo and Hostile Environment 
Harassment,'' which would define ``quid pro quo'' and ``hostile 
environment harassment'' under the Fair Housing Act. This proposed rule 
would also add new illustrations of prohibited harassment throughout 
part 100 by amending existing Sec. Sec.  100.60, 100.65, 100.80, 
100.90, 100.120, 100.130, and 100.135, and a new Sec.  100.7, 
addressing how the traditional standards for direct and vicarious 
liability operate in the Fair Housing Act context, including for claims 
of harassment.

A. Quid Pro Quo and Hostile Environment Harassment

    The proposed rule establishes within proposed Subpart H a new Sec.  
100.600, entitled ``Quid Pro Quo and Hostile Environment Harassment,'' 
which addresses what conduct constitutes these types of harassment 
under the Fair Housing Act. This section states that quid pro quo 
harassment and hostile environment harassment on the basis of race, 
color, national origin, religion, sex, disability, or familial status 
violate one or more of the prohibitions against discrimination found in 
sections 804, 805, 806 and 818 of the Fair Housing Act.
    As with other discriminatory housing practices prohibited by the 
Act, any person who claims to have been injured or believes such person 
will be injured by prohibited harassment is an aggrieved person under 
the Act, even if that person is not directly targeted by the 
harassment.\15\ For example, children may be aggrieved by harassment 
directed at their parents because the children may lose their housing. 
Similarly, a person is aggrieved if that person is denied or delayed in 
receiving a housing-related opportunity or benefit because another 
received the benefit. If, for example, a property manager awards an 
apartment to an applicant in exchange for sexual favors, the other 
applicants who were denied the apartment are aggrieved persons.\16\
---------------------------------------------------------------------------

    \15\ 42 U.S.C. 3602(i); see also 24 CFR 100.20.
    \16\ See, e.g., Fair Hous. Council v. Penasquitos Casablanca 
Owner's Ass'n, 381 Fed. Appx. 674 (9th Cir. 2010) (holding that 
minor children need not be the targets of sexual harassment directed 
at their mother but need only suffer ``actual injury as a result of 
the defendant's conduct'' to establish standing) (quoting Gladstone 
Realtors v. Village of Bellwood, 441 U.S. 91, 103 n.9 (1979)); 
Shellhammer v. Lewallen, 770 F. 2d 167 (6th Cir. 1985) (upholding a 
finding of discrimination in favor of plaintiffs, wife and husband, 
who had been evicted after wife rebuffed defendant landlord's sexual 
advances); Grieger v. Sheets, 689 F. Supp. 835 (N.D. Ill. 1988) 
(upholding both hostile environment and quid pro quo sexual 
harassment claims made by plaintiffs, wife and husband, where: 
landlord made sexual advances to the wife, landlord threatened to 
shoot the husband after he confronted the landlord, and landlord 
refused to make promised repairs after wife rebuffed landlord's 
advances). Cf. 29 CFR 1604.11(g) (EEOC regulation providing that 
``[w]here employment opportunities or benefits are granted because 
of an individual's submission to the employer's sexual advances or 
requests for sexual favors, the employer may be held liable for 
unlawful sex discrimination against other persons who were qualified 
for but denied that employment opportunity or benefit.'').
---------------------------------------------------------------------------

1. Quid Pro Quo Harassment
    Paragraph (a)(1) of new Sec.  100.600 would address quid pro quo 
harassment under the Fair Housing Act. Paragraph (a)(1) provides that 
quid pro quo harassment occurs when a person is subjected to an 
unwelcome request or demand because of race, color, religion, sex, 
national origin, disability, or familial status, and submission to the 
request or demand is, either explicitly or implicitly, made a condition 
related to his or her housing.
    Claims of quid pro quo harassment may be established on the basis 
of protected characteristics other than sex. The theory, however, has 
most typically been associated with sex. For example, quid pro quo 
harassment occurs when a housing provider conditions a tenant's 
continued housing on the tenant's submission to unwelcome requests for 
sexual favors.\17\ Similarly, conditioning the receipt of privileges or 
services in connection with housing or conditioning access to 
residential real estate-related transactions on acquiescence to 
unwelcome requests or demands for sexual favors is illegal quid pro quo 
harassment.\18\ A person's conduct may constitute quid pro quo 
harassment even where the victim acquiesces or submits to the unwelcome 
request or demand. For example, if a housing manager demands sexual 
favors under threat of eviction and the resident acquiesces in order to 
keep her housing, quid pro quo harassment has occurred.\19\ Conversely, 
a person's conduct may constitute quid pro quo harassment where the 
person takes or threatens to take an action that adversely affects the 
victim because the victim has refused to acquiesce or submit to the 
unwelcome demand.\20\
---------------------------------------------------------------------------

    \17\ See, e.g., Woods v. Foster, 884 F. Supp. 1169, 1175 (N.D. 
Ill. 1995) (shelter resident submitted to manager's demands for sex 
in exchange for retaining her housing); cf United States v. Koch, 
352 F. Supp. 2d 970, 981-83 (D. Neb. 2004) (in hostile environment 
case, some tenants submitted to sexual demands of landlord in order 
to preserve their housing).
    \18\ See, e.g., Boswell v. Gumbaytay, 2009 WL 1515872, *5 (M.D. 
Ala. 2009) (conditioning rent amount and repairs to the dwelling on 
whether sexual favors are granted); Grieger v. Sheets, 689 F. Supp. 
835 (N.D. Ill. 1988) (conditioning tenancy and repairs to dwelling 
on sexual favors from tenant).
    \19\ See, e.g., cases cited at n. 17, supra.
    \20\ See, e.g., Krueger v. Cuomo, 115 F. 3d 487, 490 (7th Cir. 
1997) (landlord evicted tenant after she rebuffed his advances and 
filed a housing discrimination claim against him); Miles v. Gilray, 
2012 U.S.Dist. LEXIS 90941 at *2, *7 (W.D. N.Y. 2012) (mobile home 
park operator served termination notice when plaintiffs rebuffed 
sexual advances); HUD v. Kogut, 1995 HUD ALJ LEXIS 52. *39 (HUD ALJ 
1995) (property manager evicted tenant after she rebuffed his sexual 
advances).

---------------------------------------------------------------------------

[[Page 63724]]

2. Hostile Environment Harassment
    Paragraph (a)(2) of proposed new Sec.  100.600 addresses hostile 
environment harassment under the Fair Housing Act. Paragraph (a)(2) 
provides that hostile environment harassment occurs when unwelcome 
conduct because of race, color, national origin, religion, sex, 
disability or familial status, is sufficiently severe or pervasive as 
to create an environment that unreasonably interferes with the 
availability, sale, rental, use, or enjoyment of a dwelling, the 
provision or enjoyment of facilities or services in connection 
therewith, or the availability or terms of residential real estate-
related transactions.\21\ It is well recognized that claims of hostile 
environment harassment should be evaluated from the perspective of a 
reasonable person in the aggrieved person's position.\22\
---------------------------------------------------------------------------

    \21\ See, e.g., Quigley v. Winter, 598 F. 3d 938, 946 (8th Cir. 
2010) (sex); Neudecker v. Boisclair Corp., 351 F. 3d 361, 364 (8th 
Cir. 2003) (disability); Krueger v. Cuomo, 115 F. 3d 487, 491 (7th 
Cir. 1997) (sex); Honce v. Vigil, 1 F. 3d 1085, 1088 (10th Cir. 
1993) (sex); Smith v. Mission Assoc. Ltd. P'ship, 225 F. Supp. 2d 
1293, 1298-99 (D. Kan. 2002) (race).
    \22\ See, e.g., Williams v. Poretsky Mgmt., 955 F. Supp. 490, 
497 (D. Md. 1996) (in hostile environment sexual harassment case 
under the Act, noting that ``[w]hether a reasonable person would 
have been detrimentally affected by the harassment to which 
[plaintiff was] subjected is quintessentially a question of fact.'') 
(emphasis added) (quotations omitted); Beliveau v. Caras, 873 F. 
Supp. 1393, 1397-98 (C.D. Cal. 1995) (adopting ``reasonable woman 
standard'' in hostile environment sexual harassment case under the 
Act and observing that ``women remain disproportionately vulnerable 
to rape and sexual assault, which can and often does shape women's 
interpretations of words or behavior of a sexual nature, 
particularly if unsolicited or occurring in an inappropriate 
context.''). See also Burlington Northern and Santa Fe Ry. v. White, 
548 U.S. 53, 68-9 (2006) (using ``reasonable employee'' standard in 
Title VII case); Harris v. Forklift Systems, Inc., 510 U.S. 17, 21-
22 (1993) (applying an objective and subjective reasonable person 
standard).
---------------------------------------------------------------------------

    Establishing hostile environment harassment requires a showing 
that: A person was subjected to unwelcome spoken, written or physical 
conduct; the conduct was because of a protected characteristic; and the 
conduct was, considering the totality of circumstances, sufficiently 
severe or pervasive that it unreasonably interfered with or deprived 
the victim of his or her right to use and enjoy the housing or to 
exercise other rights protected by the Act.
a. Totality of the Circumstances
    Proposed Sec.  100.600(a)(2)(i), entitled ``Totality of the 
circumstances,'' specifies that whether hostile environment harassment 
exists depends upon the totality of the circumstances. Proposed Sec.  
100.600(a)(2)(i)(A) provides that the factors to be considered in 
determining whether a hostile environment has been created include, but 
are not limited to, the nature of the conduct; the context in which the 
conduct occurred; the severity, scope, frequency, duration, and 
location of the incident(s); and the relationships of the persons 
involved.\23\ Assessment of the context in which the conduct occurred 
involves consideration of such factors as whether the harassment was in 
or around the home; whether the harassment was accomplished by use of a 
special privilege of the perpetrator (e.g., using a passkey or gaining 
entry by reason of the landlord-tenant relationship); whether a threat 
was involved; and whether the conduct was likely to or did cause 
anxiety, fear or hardship.
---------------------------------------------------------------------------

    \23\ See, e.g., Hall v. Meadowood, 7 Fed. Appx. 687, 689 (9th 
Cir. 2001) (describing circumstances to be considered in hostile 
environment case as including frequency of offensive conduct; 
severity; whether it involves threats, humiliation or ``mere 
offensive utterance;'' and whether it unreasonably interferes living 
conditions); see also Harris, 510 U.S. at 23 (factors to consider 
when determining whether a work environment is hostile under Title 
VII may include ``the frequency of the discriminatory conduct; its 
severity; whether it is physically threatening or humiliating, or a 
mere offensive utterance; and whether it unreasonably interferes 
with an employee's work performance'').
---------------------------------------------------------------------------

    In considering whether the totality of the circumstances evidences 
hostile environment harassment, it is particularly important to 
consider the place where the conduct occurred. Often in a fair housing 
case the harassment will occur in or around the home, which should be a 
haven of privacy, safety and security. The Supreme Court has repeatedly 
recognized that heightened rights exist within the home for, among 
other things, privacy and freedom from intrusive speech.\24\ For 
example, in a case decided under the Equal Protection Clause, the Court 
described the sanctity of the home as follows:
---------------------------------------------------------------------------

    \24\ See, e.g., Fla. Bar v. Went For It, Inc., 515 U.S. 618, 625 
(1995) (describing home as place to ``avoid intrusions''); O'Connor 
v. Ortega, 480 U.S. 709, 724 (1987) (holding reasonableness standard 
is proper for workplace searches because employee's expectation of 
privacy is much less than when they are at home); Cohen v. 
California, 403 U.S. 15, 21-22 (1971) (``[T]his court has recognized 
that government may properly act in many situations to prohibit 
intrusion into the privacy of the home of unwelcome views and ideas 
which cannot be totally banned from the public dialogue . . . 
[Regarding the] claim to a recognizable privacy interest . . ., 
surely there is nothing like the interest in being free from 
unwanted expression in the confines of one's own home.'').

    Preserving the sanctity of the home, the one retreat to which 
men and women can repair to escape from the tribulations of their 
daily pursuits, is surely an important value. Our decisions reflect 
no lack of solicitude for the right of an individual ``to be let 
alone'' in the privacy of the home, ``sometimes the last citadel of 
the tired, the weary, and the sick.'' The State's interest in 
protecting the well-being, tranquility, and privacy of the home is 
certainly of the highest order in a free and civilized society.\25\
---------------------------------------------------------------------------

    \25\ Carey v. Brown, 447 U.S. 455, 471 (1980) (quoting Gregory 
v. City of Chicago, 394 U.S. 111, 125 (1969) (Black, J., 
concurring))

    When harassment occurs in the workplace, the victim can escape to 
his home. In contrast, when harassment occurs in and around the home, 
the victim has little opportunity to escape it short of moving or 
staying away from the home--neither of which should be required. As one 
court noted in a sexual harassment case under the Act, the home is ``a 
place where [one is] entitled to feel safe and secure and need not 
flee.'' \26\ Thus, the nature and frequency of harassing conduct needed 
to establish employment discrimination under Title VII does not 
necessarily transfer to cases under the Fair Housing Act. Instead, the 
sanctity of the home must be considered in making the totality of the 
circumstances assessment. Thus, while Title VII and the Fair Housing 
Act regulations proposed by this rule use similar terms, such as 
``totality of the circumstances'' and ``sufficiently severe or 
pervasive,'' the same or similar conduct may result in a violation of 
the Fair Housing Act even though it may not violate Title VII.
---------------------------------------------------------------------------

    \26\ Quigley v. Winter, 598 F. 3d 938, 947 (8th Cir. 2010) 
(sexual harassment violation of Act).
---------------------------------------------------------------------------

    Proposed Sec.  100.600(a)(2)(i)(B) provides that the absence of 
psychological or physical harm is not dispositive in determining 
whether hostile environment harassment has occurred. Evidence of such 
harm is but one of many factors to be considered in the totality of 
circumstances. However, the severity of psychological or physical harm 
may be considered in determining the proper amount of any damages to 
which an aggrieved person may be entitled.\27\
---------------------------------------------------------------------------

    \27\ See, e.g., Harris, 510 U.S. at 23 (noting that effect on 
victim's psychological well-being is relevant to determining whether 
she ``found the environment abusive'' but absence of psychological 
harm is not dispositive in determining whether harassment occurred).
---------------------------------------------------------------------------

3. Type of Conduct
    Prohibited quid pro quo harassment and hostile environment 
harassment require unwelcome conduct, and proposed Sec.  100.600(b) 
explains that the unwelcome conduct can be written, verbal, or other 
conduct and does not require physical contact. The unwelcome conduct 
may come in many forms, such as using threatening imagery (e.g., cross 
burning or swastika); damaging property; physical assault;

[[Page 63725]]

threatening physical harm to an individual, family member, assistance 
animal or pet; or impeding the physical access of a person with a 
mobility impairment. The unwelcome conduct could be spoken or written, 
such as requests for sexual favors. It may include gestures, signs, and 
images directed at the aggrieved persons. It may include the use of 
racial, religious or ethnic epithets, derogatory statements or 
expressions of a sexual nature, taunting or teasing related to a 
person's disability, or threatening statements. In addition, the 
unwelcome conduct may be communicated to the targeted individual in 
direct and indirect ways. For example, the unwelcome conduct may 
involve the use of email, text messages, or social media.
    As is the case with other prohibited conduct under the Act, an 
individual violates the Act so long as the quid pro quo or hostile 
environment harassment is because of a protected characteristic, even 
if he or she shares the same protected characteristic as the targeted 
person. For example, in sexual harassment claims, an individual 
violates the Act by harassing a person of the same sex or by harassing 
both men and women, so long as the unwelcome conduct is because of sex. 
Similarly, a person violates the Act by harassing a person of the same 
race or color if the unwelcome conduct is because of race or color.
    With respect to sexual harassment, harassing conduct need not be 
motivated by sexual desire in order to support a finding of illegal 
discrimination. Sexually harassing conduct must occur ``because of 
sex,'' which can be shown by, for example, conduct motivated by 
hostility toward persons of one sex; conduct that occurs because a 
person acts in a manner that conflicts with gender-based stereotypes of 
how persons of a particular sex should act; or conduct motivated by 
sexual desire or control.
4. Number of Incidents
    Proposed Sec.  100.600(c) provides that a single incident because 
of race, color, religion, sex, familial status, national origin or 
disability can constitute an illegal quid pro quo, or, if sufficiently 
severe, a hostile environment in violation of the Act.\28\
---------------------------------------------------------------------------

    \28\ See, e,g., Quigley v. Winter, 598 F. 3d 938 (8th Cir. 2010) 
(holding that a single instance of quid pro quo violated the Act 
where landlord implied that the return of a rent deposit depended on 
seeing plaintiff's nude body or receiving a sexual favor); Doe v. 
Ore Duckworth, 2013 U.S. Dist. LEXIS 113287, *12 (E.D. La. Aug. 12, 
2013) (holding that touching of an intimate area of a plaintiff's 
body is conduct that can be sufficiently severe to create a hostile 
housing environment in violation of the Act, ``even if it is an 
isolated incident''); Beliveau v. Caras, 873 F. Supp. 1393, 1398 
(C.D. Cal. 1995) (stating that a single incident of sexual touching 
that would constitute sexual battery under state law, ``would 
support a [hostile environment] sexual harassment claim under the 
federal Fair Housing Act.''); see also cases cited at note 11, 
supra, and accompanying text (explaining that harassment that occurs 
in or around one's home is especially intrusive, violative, and 
threatening); cf. Faragher v. City of Boca Raton, 524 U.S. 775, 788 
(U.S. 1998) (noting that ``isolated incidents [of harassment] 
(unless extremely serious) will not amount to discriminatory changes 
in the `terms and conditions of employment' '' constituting a 
hostile environment) (citations omitted;
---------------------------------------------------------------------------

B. Illustrations--Subparts B, C, and F

    The proposed rule would add illustrations of quid pro quo and 
hostile environment harassment to existing Sec. Sec.  100.60, 100.65, 
100.80, 100.90, 100.120, 100.130, and 100.135.
    In Sec.  100.60, entitled ``Unlawful refusal to sell or rent or to 
negotiate for the sale or rental,'' the proposed rule would add the 
following paragraphs as illustrations of prohibited quid pro quo and 
hostile environment harassment under the Fair Housing Act: Conditioning 
the availability of a dwelling, including the price, qualification 
criteria, or standards or procedures for securing a dwelling, on a 
person's response to harassment because of race, color, religion, sex, 
familial status, national origin, or disability; subjecting a person to 
harassment because of race, color, religion, sex, familial status, 
national origin, or disability that causes the person to vacate a 
dwelling or abandon efforts to secure the dwelling. Conditioning the 
``availability'' of a dwelling means the initial or continued 
availability of a dwelling, or both.
    In Sec.  100.65, entitled ``Discrimination in terms, conditions, 
and privileges and in services and facilities,'' the proposed rule 
would add the following paragraph as an illustration of prohibited quid 
pro quo and hostile environment harassment under the Fair Housing Act: 
Conditioning the terms, conditions, or privileges relating to the sale 
or rental of a dwelling or denying or limiting the services or 
facilities in connection with a dwelling on a person's response to 
harassment because of race, color, religion, sex, familial status, 
national origin, or disability; subjecting a person to harassment 
because of race, color, religion, sex, disability, familial status, or 
national origin that has the effect of imposing different terms, 
conditions, or privileges relating to the sale or rental of a dwelling 
or denying or limiting service or facilities in connection with the 
sale or rental of a dwelling.
    In Sec.  100.80, entitled ``Discriminatory representation on the 
availability of dwellings,'' the proposed rule would add the following 
paragraph as an illustration of a prohibited quid pro quo harassment 
under the Fair Housing Act: Representing to an applicant that a unit is 
unavailable because of the applicant's response to a request for a 
sexual favor or other harassment because of race, color, religion, sex, 
familial status, national origin, or disability.
    In Sec.  100.90, entitled ``Discrimination in the provision of 
brokerage services,'' the proposed rule would add the following 
paragraphs as illustrations of prohibited quid pro quo and hostile 
environment under the Fair Housing Act: Conditioning access to 
brokerage services on a person's response to harassment because of 
race, color, religion, sex, familial status, national origin, or 
disability; subjecting a person to harassment because of race, color, 
religion, sex, familial status, national origin, or disability that has 
the effect of discouraging or denying access to brokerage services.
    In Sec.  100.120, entitled ``Discrimination in the making of loans 
and in the provision of other financial services,'' the proposed rule 
would add the following paragraphs as illustrations of prohibited quid 
pro quo and hostile environment harassment under the Fair Housing Act: 
Conditioning the availability of a loan or other financial assistance 
that is or will be secured by a dwelling on a person's response to 
harassment because of race, color, religion, sex, familial status, 
national origin, or disability; subjecting a person to harassment 
because of race, color, religion, sex, familial status, national 
origin, or disability that affects the availability of a loan or other 
financial assistance that is or will be secured by a dwelling.
    In Sec.  100.130, entitled ``Discrimination in the terms and 
conditions for making available loans or other financial assistance,'' 
the proposed rule would add the following paragraphs as illustrations 
of prohibited quid pro quo and hostile environment harassment under the 
Fair Housing Act: Conditioning the aspect of a loan or other financial 
assistance to be provided with respect to a dwelling, or the terms or 
conditions thereof, on a person's response to harassment because of 
race, color, religion, sex, familial status, national origin, or 
disability; subjecting a person to harassment because race, color, 
religion, sex, familial status, national origin, or disability that has 
the effect of imposing different terms or conditions for the 
availability of such loans or other financial assistance.
    In Sec.  100.135, entitled ``Unlawful practices in the selling, 
brokering, or appraising of residential real property,''

[[Page 63726]]

the proposed rule would add the following paragraph regarding 
prohibited quid pro quo harassment under the Fair Housing Act: 
Conditioning the terms of an appraisal of residential real property in 
connection with the sale, rental, or financing of a dwelling on a 
person's response to harassment because of race, color, religion, sex, 
familial status, national origin, or disability.
    The proposed rule would not add an additional example of quid pro 
quo or hostile environment harassment to Sec.  100.400, entitled 
``Prohibited Interference, Coercion or Intimidation,'' because existing 
Sec.  100.400(c)(2) already encompasses both in identifying as an 
example of conduct made unlawful by section 818: ``Threatening, 
intimidating or interfering with persons in their enjoyment of a 
dwelling because of the race, color, religion, sex, handicap, familial 
status, or national origin of such persons, or of visitors or 
associates of such persons.''

C. Establishing Liability for Discriminatory Housing Practices

    This proposed rule would add new Sec.  100.7 to subpart A 
(General), entitled ``Liability for Discriminatory Housing Practices.'' 
This proposed rule is intended to clarify standards for liability under 
this part, based on traditional principles of tort liability, and not 
to impose any new legal obligations or create or define new agency 
relationships or duties of care.\29\
---------------------------------------------------------------------------

    \29\ See Meyer v. Holley, 537 U.S. at 282, 287 (applying 
``traditional agency principles'' and ``ordinary background 
principles'' of tort liability to Fair Housing Act claim); see also, 
e.g., Restatement (Third) of Agency section 7.05 (``A principal . . 
. is subject to liability for harm to a third party caused by [an] 
agent's conduct if the harm was caused by the principal's negligence 
in selecting, training, supervising, or otherwise controlling the 
agent.'').
---------------------------------------------------------------------------

1. Direct Liability
    Proposed paragraph (a) of Sec.  100.7 identifies direct liability 
under the Act. New Sec.  100.7(a)(1)(i) proposes that a person is 
liable for his or her own discriminatory housing practices. New 
Sec. Sec.  100.7(a)(1)(ii) and (a)(1)(iii) describe direct liability 
grounded in negligence. New Sec.  100.7(a)(1)(ii) proposes that a 
person is directly liable for failing to take prompt action to correct 
and end a discriminatory housing practice by that person's employee or 
agent where the person knew or should have known of the discriminatory 
conduct. New Sec.  100.7(a)(1)(iii) proposes that a person is directly 
liable for failing to fulfill a duty to take prompt action to correct 
and end a discriminatory housing practice by a third-party (i.e., a 
non-agent) when the person knew or should have known of the 
discriminatory conduct. New Sec.  100.7(a)(1)(iii) also proposes that a 
housing provider's duty to take prompt action to correct and end a 
discriminatory housing practice by a third-party can derive from an 
obligation to the aggrieved person created by contract or lease 
(including bylaws or other rules of a homeowners association, 
condominium or cooperative), or by federal, state or local law.\30\
---------------------------------------------------------------------------

    \30\ See, e.g., Reeves v. Carrollsburg Condo. Unit Owners 
Ass'n., 1997 U.S. Dist. LEXIS 21762, *26 (D.D.C. 1997) (denying 
association's motion for summary judgment because association knew 
or should have known of resident's harassment of plaintiff and had a 
duty to enforce its bylaws, including sanctions and litigation, yet 
failed to do so); see also infra note 32 and accompanying text).
---------------------------------------------------------------------------

    With respect to a person's direct liability for the actions of an 
agent, Sec.  100.7(a)(1)(ii) recognizes that a principal who knows or 
should have known that his or her agent has engaged in or is engaging 
in unlawful conduct and allows it to continue is complicit in or has 
ratified the discrimination.\31\ With respect to direct liability for 
the conduct of a non-agent, Sec.  100.7(a)(1)(iii) codifies the 
traditional principle of liability, and HUD's longstanding position, 
that a person is directly liable under the Act for harassment 
perpetrated by non-agents if the person knew or should have known of 
the harassment, had a duty to take prompt action to correct and end the 
harassment, and failed to do so or took action that he or she knew or 
should have known would be unsuccessful in ending the harassment.\32\ 
This liability arises when, for example, a person, including a 
management company, homeowner's association, condominium association, 
or cooperative, knew or should have known that a resident was harassing 
another resident, and yet did not take prompt action to correct and end 
it, while having a duty to do so. As recognized by Sec.  
100.7(a)(1)(iii), this duty may be created, for example, by a lease or 
other contract under which a housing provider is legally obligated to 
exercise reasonable care to protect residents' safety and curtail 
unlawful conduct in areas under the housing provider's control, or by 
federal, state or local laws requiring the same.
---------------------------------------------------------------------------

    \31\ See, e.g., United States v. Balistrieri, 981 F. 2d 916, 930 
(7th Cir. 1992) (owner liable for agent's racially discriminatory 
rental practices of which he knew and failed to stop); Heights 
Community Congress v. Hilltop Realty, Inc., 774 F. 2d 135, 141, (6th 
Cir. 1985) (realty firm that knew of fair housing violations by its 
agents and failed to take corrective action were liable); Richards 
v. Bono, 2005 U.S. Dist. LEXIS 43585, *32 (M.D. Fla. 2005) (wife/co-
owner who knew of husband's sexual harassment yet failed to stop it 
liable for that violation); United States v. Veal, 365 F. Supp 2d 
1034, 1041 (W.D. Mo. 2004) (same).
    \32\ See, e.g., Neudecker v. Boisclair Corp., 351 F. 3d 361, 364 
(8th Cir. 2003) (owner may be liable for acts of tenants and 
management's children after failing to respond to plaintiff's 
complaints of harassment); Fahnbulleh v. GFZ Realty, LLC, 795 F. 
Supp. 2d 360, 364-65 (D. Md. 2011) (denying landlord's motion to 
dismiss because the Act imposes no categorical rule against landlord 
liability for tenant-on-tenant harassment); Wilstein v. San Tropai 
Condo. Master Ass'n, 1999 U.S. Dist. LEXIS 7031, *28-33 (N.D. Ill. 
Apr. 21, 1999) (rejecting condo association's argument that it had 
no duty to stop harassment of plaintiff by other residents and 
holding that association could be liable where evidence indicated 
that association knew of the harassment and bylaws authorized the 
association to regulate such conduct); Reeves v. Carrollsburg Condo. 
Unit Owners Ass'n, 1997 U.S. Dist. LEXIS 21762, * 26 (D.D.C. 1997) 
(condo association that knew of harassment by resident but failed to 
take corrective actions may violate Act); see also. Bradley v. 
Carydale Enterprises, 707 F. Supp. 217 (E.D. Va. 1989) (finding that 
owners and managers' failure to address one tenant's racial 
harassment of a neighboring tenant states a claim under 42 U.S.C. 
1981, 1982); Freeman v. Dal-Tile Corp., 750 F. 3d 413, 422-23 (4th 
Cir. 2014) (holding that ``an employer is liable under Title VII for 
third parties creating a hostile work environment if the employer 
knew or should have known of the harassment and failed to take 
prompt remedial action reasonably calculated to end [it].'') (4th 
Cir. 2014) (internal quotation marks and citations omitted); 
Galdamez v. Potter, 415 F. 3d 1015, 1022 (9th Cir. 2005) (``An 
employer may be held liable for the actionable third-party 
harassment of its employees where it ratifies or condones the 
conduct by failing to investigate and remedy it after learning of 
it.'').
---------------------------------------------------------------------------

    A principal ``should have known'' about the illegal discrimination 
of the principal's agent when the principal is found to have had 
knowledge from which a reasonable person would conclude that the agent 
was discriminating.\33\ For example, if a housing provider's male 
maintenance worker enters female tenants' units without notice using a 
passkey, and enters their bedrooms or bathrooms while they are changing 
or showering and exposes himself, and the tenants complain about this 
conduct to the manager, the manager has reason to know that unlawful 
discrimination may be occurring. If the manager conveys this 
information to the owner, and neither the owner nor the manager takes 
any corrective action, they are both liable for violating the Act. In 
that case,

[[Page 63727]]

the principal is liable as if the principal had committed the illegal 
act.\34\
---------------------------------------------------------------------------

    \33\ The ``knew or should have known'' concept of liability is 
well-established in civil rights and tort law. As the Supreme Court 
has recognized, fair housing actions are essentially tort actions. 
See Meyer v. Holley, 537 U.S. 280, 285 (2003) (citing Curtis v. 
Loether, 415 U.S. 189, 195-96 (1974)); see also Fahnbulleh v. GZF 
Realty, LLC, 795 F. Supp. 2d 360, 363 (D. Md. 2011) (quoting 
Williams v. Poretsky Mgmt., 955 F. Supp. 490, 496 (D. Md. 1996)) 
(``[c]onduct is imputable to a landlord, if the landlord knew or 
should have known of the harassment and took no effectual action to 
correct the situation.'').
    \34\ See, e.g., Fahnbulleh, 795 F. Supp. 2d at 360, 363; 
Williams v. Poretsky Mgmt., 955 F. Supp. 490, 496 (D. Md. 1996).
---------------------------------------------------------------------------

    Similarly, an apartment owner ``should have known'' of tenant 
harassment by another tenant when the owner had knowledge from which a 
reasonable person would conclude that the harassment was occurring. It 
is important to note, however, that not every quarrel among neighbors 
amounts to a violation of the Fair Housing Act.\35\
---------------------------------------------------------------------------

    \35\ See, e.g., Bloch v. Frischholz, 587 F. 3d 771, 783 (7th 
Cir. 2009) (quoting Halprin v. Prairie Single Family Homes of 
Dearborn Park Ass'n, 388 F. 3d 327, 330 (7th Cir. 2004) (noting that 
interference under Sec.  818 ``is more than a `quarrel among 
neighbors' ''); Sporn v. Ocean Colony Condominium Assn, 173 F. Supp. 
2d 244, 251-52 (D.N.J. 2001) (noting that section 818 ``does not [ ] 
impose a code of civility'' on neighbors); United States v. Weisz, 
914 F. Supp. 1050, 1054-55 (S.D.N.Y. 1996) (holding that allegations 
that Jewish neighbor harassed complainants because of their religion 
were ``nothing more than a series of skirmishes in an unfortunate 
war between neighbors''). But see Ohana v. 180 Prospect Place, 996 
F. Supp. 238, 243 (E.D.N.Y. 1998) (neighbors who intentionally 
intrude upon quietude of another's home may violate Act).
---------------------------------------------------------------------------

    Proposed Sec.  100.7(a)(2) provides that corrective actions must be 
effective in ending the discrimination, but may not injure the 
aggrieved persons.\36\ For example, corrective actions appropriate for 
a housing provider to utilize to stop tenant-on-tenant harassment might 
include verbal and written warnings; enforcing lease provisions to 
move, evict, or otherwise sanction tenants who harass or permit guests 
to harass; issuing no-trespass orders or reporting conduct to the 
police; and establishing an anti-harassment policy and complaint 
procedures, depending on the nature, frequency, and severity of the 
harassment, and the size and authority of the provider. When the 
perpetrator is an employee of the housing provider, corrective actions 
might include training, warnings, or reprimands; termination or other 
sanctions; and reports to the police. The housing provider should 
follow up with the victim of the harassment after the corrective action 
is taken to ensure that it was effective. If the housing provider knows 
or should have known that the corrective action was ineffective, the 
provider has a duty to take additional corrective actions.
---------------------------------------------------------------------------

    \36\ See, e.g., Miller v. Towne Oaks East Apartments, 797 F. 
Supp. 557, 562 (E.D. Tex.1992) (finding landlord liable for 
violating Act by evicting both harasser and victim of harassment 
instead of only harasser).
---------------------------------------------------------------------------

2. Vicarious Liability
    Proposed paragraph (b) of Sec.  100.7 provides that a person is 
vicariously liable for the discriminatory housing practices of his or 
her agents or employees, as specified by agency law. This provision is 
consistent with the holding of Meyer v. Holley, 537 U.S. 280, 285-289 
(2003) that traditional principles of agency law apply in fair housing 
cases. Under well-established principles of agency law, a principal is 
vicariously liable for the actions of his or her agents taken within 
the scope of their relationship or employment, as well as for actions 
committed outside the scope of the relationship or employment when the 
agent is aided in the commission of such acts by the existence of the 
agency relationship.\37\ Unlike direct liability, someone may be 
vicariously liable for the acts of an agent regardless of whether the 
person knew of or intended the wrongful conduct or was negligent in 
preventing it from occurring. In determining whether a principal is 
vicariously liable, an agent's responsibilities, duties, and functions 
must be carefully examined to determine whether an agency relationship 
exists, and also whether the conduct was within the scope of the agency 
relationship or aided by the existence of the agency relationship.\38\
---------------------------------------------------------------------------

    \37\ See Meyer, 537 U.S. at 285 (``[T]raditional vicarious 
liability rules . . . make principals or employers vicariously 
liable for acts of their agents or employees in the scope of their 
authority or employment.''); Glover v. Jones, 522 F. Supp. 2d 496, 
507 (W.D.N.Y. 2007) (holding that ``a property owner may be 
vicariously liable under the Fair Housing Act for the actions of an 
employee even when they are outside the scope of employment . . . if 
the employee was aided in accomplishing the tort by the existence of 
the agency relation.'') (quoting Mack v. Otis Elevator Co., 326 F. 
3d 116, 123 (2d Cir. 2003) (internal quotation marks omitted); see 
also Boswell v. GumBayTay, No. 2:07-CV-135-WKW[WO], 2009 U.S. Dist. 
LEXIS 45954, *17 (M.D. Ala. June 1, 2009) (holding that vicarious 
liability attached to property owner where property manager's 
``position essentially gave him unfettered access to communicate 
with and personally visit [the plaintiff]'' and he ``used his power 
as property manager as a vehicle through which to perpetrate his 
unlawful conduct by refusing repairs, raising the rent, and 
attempting to evict [the plaintiff] as a consequence for [her] 
refusal to provide sexual favors.''); Glover at 522 F. Supp. 2d at 
507 (rejecting defendant property owner's motion for summary 
judgment on the issue of vicarious liability where evidence showed 
that property manager used his ``position as the de facto landlord 
to perpetrate FHA [harassment] violations . . . giving] him the 
opportunity to visit the apartment when he wanted, and enabl[ing] 
him to control Plaintiff's rent''); Richards v. Bono, 2005 U.S. 
Dist. LEXIS 43585, *30 (M.D. Fla. 2005) (holding that wife/co-owner 
of property could be vicariously liable for husband's harassment 
where husband acted as her agent and used his position as owner, 
property manager, and maintenance supervisor to subject the 
plaintiff to sexual harassment by using a key to enter plaintiff's 
apartment and threatening plaintiff with eviction).
    \38\ See, e.g, United States v. Hylton, 590 Fed. Appx. 13, 17 
(2d Cir. 2014); Cleveland v. Caplaw Enters., 448 F. 3d 518, 522 (2d 
Cir. 2006); Alexander v. Riga, 208 F. 3d 419, 430-33 (3d Cir. 2000); 
Jankowski Lee & Assocs. v. Cisneros, 91 F. 3d 891, 896-97 (7th Cir. 
1996); Cabrera v. Jakabovitz, 24 F. 3d 372, 388 (2d Cir. 1994); City 
of Chicago v. Matchmaker Real Estate Sales Center, 982 F. 2d 1086, 
1096-98 (7th Cir. 1992); United States v. Balistrieri, 981 F. 2d 
916, 930 (7th Cir. 1992); Walker v. Crigler, 976 F. 2d 900, 903-05 
(4th Cir. 1992); Hamilton v. Svatik, 779 F. 2d 383, 388 (7th Cir. 
1985); Marr v. Rife, 503F. 2d 735, 741 (6th Cir. 1974); United 
States v. Prach, 2005 WL 1950018 *4 (E.D. Wa. 2005); Richards v. 
Bono, 2005 WL 1065141 *7 (M.D. Fla. 2005); United States v. Veal, 
365 F. Supp. 2d 1034, 1041 (W.D. Mo. 2004); United States v. 
Habersham Props., 319 F. Supp. 2d 1366,1375 (N.D. Ga. 2003); United 
States v. Garden Homes Mgmt., 156 F. Supp. 2d 413, 424-25 (D.N.J. 
2001); Beliveau v. Caras, 873 F. Supp. 1393, 1400-01 (C.D. Cal. 
1995).
---------------------------------------------------------------------------

    As provided in new Sec.  100.600(a)(2)(ii), the proposed rule would 
not extend to the Fair Housing Act the judicially-created Title VII 
affirmative defense to an employer's vicarious liability for hostile 
environment harassment committed by a supervisory employee. The Title 
VII affirmative defense permits an employer to avoid vicarious 
liability for such harassment by showing that (1) the employer 
exercised reasonable care to prevent and correct promptly the 
supervisor's harassing behavior, including implementing a policy to 
prevent and correct instances of sexual harassment and procedures for 
training and complaint filing; and (2) the employee unreasonably failed 
to take advantage of any preventative or corrective opportunities 
provided by the employer to otherwise avoid harm.\39\ The Title VII 
affirmative defense applies only where the supervisor's hostile 
environment harassment did not involve a tangible employment action, 
e.g., hiring, firing, demotion, undesirable reassignment, or other 
actions resulting in a significant change in employment status.
---------------------------------------------------------------------------

    \39\ See EEOC Enforcement Guidance on Vicarious Employer 
Liability for Unlawful Harassment by Supervisors, http://www.eeoc.gov/policy/docs/harassment.html. See also Vance v. Ball 
State, 133 S. Ct. 2434, 2439 (2013); Burlington Industries, Inc. v. 
Ellerth, 524 U.S. 742, 765 (1998); Faragher v. City of Boca Raton, 
524 U.S. 775, 806-08 (1998).
---------------------------------------------------------------------------

    Noting that common-law principles of agency liability ``may not be 
transferable in all their particulars to Title VII,'' \40\ the Supreme 
Court fashioned this defense to employer liability in order to ``adapt 
agency concepts to the practical objectives of Title VII.'' \41\ 
Specifically, the Court adopted the defense ``[i]n order to accommodate 
the agency principles of vicarious liability for harm caused by misuse 
of supervisory authority, as well as Title VII's equally basic policies 
of encouraging forethought by employers and saving action by objecting 
employees.'' \42\ The

[[Page 63728]]

Court reasoned that limiting employer liability would ``effect 
Congress' intention to promote conciliation rather than litigation in 
the Title VII context and the EEOC's policy of encouraging the 
development of grievance procedures [by employers].'' \43\
---------------------------------------------------------------------------

    \40\ Ellerth, 524 U.S. at 755 (internal quotations omitted) 
(quoting Meritor Sav. Bank, FSB v. Vinson, 477 U.S. 57, 72 (1986)).
    \41\ Faragher, 524 U.S. at 802.n3.
    \42\ Ellerth, 524 U.S. at 764.
    \43\ Id. (internal citations omitted).
---------------------------------------------------------------------------

    The Title VII affirmative defense is not appropriately applied to 
harassment in the housing context because the Fair Housing Act simply 
follows traditional principles of vicarious liability.\44\ But even if 
the Fair Housing Act did authorize policy-driven adaptations of agency 
principles in some circumstances, the significant difference between 
the enforcement policies of Title VII and the Fair Housing Act make the 
affirmative defense to employer liability neither relevant nor 
appropriate to apply to liability under the Fair Housing Act. Most 
notably, employees are required to exhaust their administrative 
remedies before proceeding to court under Title VII,\45\ whereas the 
Fair Housing Act has no exhaustion requirement. Nothing in the Act 
requires victims of housing discrimination, before filing a civil 
action, to file an administrative complaint with HUD or to await HUD's 
authorization to initiate a lawsuit. Rather, the Fair Housing Act 
``provide[s] all victims of [housing discrimination] two alternative 
mechanisms by which to seek redress: Immediate suit in federal district 
[or state] court, or a simple, inexpensive, informal conciliation 
procedure, to be followed by litigation should conciliation efforts 
fail.'' \46\ Even where a fair housing complainant chooses to file an 
administrative complaint with HUD, the complainant need not wait for 
HUD to act but rather may simultaneously initiate a lawsuit in federal 
or state court.\47\
---------------------------------------------------------------------------

    \44\ See Meyer, 537 U.S. at 285.
    \45\ See 42 U.S.C. 2000e-5(f)(1).
    \46\ Gladstone Realtors v. Village of Bellwood, 441 U.S. 91, 104 
(1979) (emphasis added); see also 42 U.S.C. 3610, 3613.
    \47\ See 42 U.S.C. 3613(a)(2)-(3).
---------------------------------------------------------------------------

    Nor do the specific, practical concerns that led the Court to adopt 
the affirmative defense to vicarious liability for certain employment 
relationships arise in the housing context. In adopting the affirmative 
defense under Title VII, the Supreme Court distinguished between 
workplace harassment perpetrated by supervisors, which is often 
facilitated by the supervisor's agency relationship with the employer, 
and harassment perpetrated by co-workers, which is not similarly 
facilitated.\48\ While the Court recognized that a supervisor's 
harassing conduct ``in [a] sense . . . is always aided by the agency 
relation'' because of his or her power and authority in the 
workplace,\49\ the Court also noted that it is ``less obvious'' that a 
supervisor is aided by the agency relationship where the supervisor 
creates a hostile environment that does not involve a tangible 
employment action.\50\ The Court was concerned that to hold employers 
vicariously liable for hostile environment harassment by a supervisor 
that did not involve a tangible employment action \51\ would undermine 
the traditional distinction between employer liability for harassment 
by a supervisor, for which employers typically are held vicariously 
liable, and employer liability for co-worker harassment, for which 
employers are typically liable under a negligence theory.\52\ To avoid 
this result, the Court drew a hard line separating two categories of 
supervisor harassment: (1) Those involving a tangible employment 
action, where the supervisory function is clear and manifest, and thus 
the tort plainly aided by the agency relationship; and (2) those not 
involving a tangible employment action, where the supervisors' 
harassment is less distinguishable from harassment by non-supervisory 
co-workers.\53\ The Court held that where hostile environment 
harassment by a supervisor does not result in a tangible employment 
action, employers can raise the negligence-based affirmative defense to 
vicarious liability described above.
---------------------------------------------------------------------------

    \48\ See Ellerth, 524 U.S. at 763-65; Faragher, 524 U.S. at 801-
03.
    \49\ Ellerth, 524 U.S. at 763.
    \50\ Id. (observing that ``there are acts of harassment a 
supervisor might commit . . . where the supervisor's status makes 
little difference.''); see also id. at 761 (defining a ``tangible 
employment action'' as ``a significant change in employment status, 
such as hiring, firing, failing to promote, reassignment with 
significantly different responsibilities, or a decision causing a 
significant change in benefits'').
    \51\ With respect to harassment involving a tangible employment 
action, the Court held that ``When a supervisor makes a tangible 
employment decision, there is assurance the injury could not have 
been inflicted absent the agency relation. Id. at 761-62. Thus, the 
Court concluded, ``a tangible employment action taken by the 
supervisor becomes for Title VII purposes the act of the employer.'' 
Id. at 762.
    \52\ See id. at 760 (expressing concern that ``an employer would 
be subject to vicarious liability not only for all supervisor 
harassment, but also for all co-worker harassment.''); see also id. 
(citing the ``knows or should have known'' negligence standard of 
liability for cases of harassment between ``fellow employees'' 
established by 29 CFR 1604.11(d)).
    \53\ See Ellerth, 524 U.S. at 762-63.
---------------------------------------------------------------------------

    But the concerns that led the Supreme Court to distinguish 
workplace harassment by a supervisor from that by a fellow employee do 
not extend to the housing context where supervisory status of a housing 
provider's agent plays a far less significant role in facilitating 
harassment.\54\ While workplace harassment may be perpetrated by an 
agent who has no authority over the terms or conditions of the victim's 
employment (e.g., by a co-worker) such that the harassment is not aided 
by the perpetrator's agency relationship with the employer, harassment 
of a homeseeker or tenant by an agent of a housing provider does 
involve an agent who has authority over terms or conditions of the 
homeseeker's or tenant's housing or housing-related services.\55\ 
Whether the perpetrator is a property manager, a mortgage loan officer, 
a realtor, or a management company's maintenance person, a housing 
provider's agent holds an unmistakable position of power and control 
over the victimized homeseeker or resident. For example, a property 
manager can recommend (or sometimes even initiate) the eviction of a 
harassment victim or refuse to renew a victim's lease, while a 
maintenance person may withhold repairs to a victim's apartment or may 
access the victim's apartment without proper notice or justification. 
Likewise, a realtor can refuse to show a home to or present a purchase 
offer from a harassment victim, while a loan officer might reject a 
victim's mortgage application or alter the loan terms being offered. 
Thus, unlike in the employment arena, an agent who harasses residents 
or homeseekers is aided by his agency relationship with the housing 
provider, whether or not a tangible housing action results.\56\ For 
this reason, the Title VII affirmative defense is not relevant to the 
effective resolution of fair housing disputes. Significantly, we are 
unaware of any court having extended the Title VII affirmative defense 
to fair housing claims.
---------------------------------------------------------------------------

    \54\ Cf. Arguello v. Conoco, Inc., 207 F. 3d 803, 810 (5th Cir. 
2000) (holding that the Title VII affirmative defense does not apply 
to harassment claims under 42 U.S.C. 1981 and Title II of the Civil 
Rights Act of 1964, 42 U.S.C. 2000a).
    \55\ Cf. id. at 810 (noting that racially derogatory remarks and 
other discrimination directed at plaintiff-customers by non-
supervisory employee ``was just as harmful as if the discriminatory 
acts had been committed by one of [defendant-employer's] supervisory 
employees'').
    \56\ See, e.g, Salisbury v. Hickman, 974 F. Supp. 2d 1282, 1293 
(E.D. Cal. 2013) (noting that ``Mr. Crimi's ability [as the on-site 
property manager] to influence Ms. Salisbury's well-being . . . adds 
yet another degree of severity to Mr. Crimi's [harassing] conduct. 
This reality exists even if Mr. Crimi did not engage in any quid pro 
quo sexual harassment.'').
---------------------------------------------------------------------------

    Instead, the affirmative defense would add additional burdens that 
are incompatible with the broad protections and streamlined enforcement 
mechanisms afforded by the Fair

[[Page 63729]]

Housing Act. Requiring victims of hostile environment harassment to 
complain to their housing provider or risk forfeiting their ability to 
obtain relief under the Fair Housing Act would unduly burden the large 
proportion of tenants who have little to no contact with their housing 
providers except through an onsite building manager or maintenance 
person who may be the very agent responsible for the harassment. 
Moreover, in HUD's experience, particularly in addressing instances of 
sexual harassment, tenants who are victims of sexual harassment by the 
landlord's agent are especially vulnerable. A housing provider's 
liability for such conduct should not be made contingent upon a 
tenant's ability to avail herself of a complaint process--even an 
adequate complaint procedure--established by the housing provider.
    While the risk of retaliation attendant to reporting harassment is 
serious in the employment context, such risk is even graver in the 
residential context. Victims of harassment by a landlord's agent not 
only risk eviction, a particularly severe consequence for low-income 
tenants whose affordable housing options are limited, they may also 
suffer physical harm to themselves or their family members in 
retaliation for filing a grievance. In the most egregious 
circumstances, an agent may abuse the power conferred by his agency 
relationship to gain access to a victim's home and inflict violence 
upon the victim after the victim has reported harassment. In HUD's 
view, a victim of hostile environment harassment should not be forced 
to choose between the risk of retaliation and the risk of losing his or 
her right to hold a housing provider liable for the acts of its agents.
    While Title VII and the Fair Housing Act share a common goal of 
eliminating discrimination in their respective spheres, the mechanisms 
for doing so are fundamentally different. In addition, as discussed 
above, one's workplace and one's home are very different places, with 
the latter having substantial expectations of privacy, security and 
safety. Individuals have a justified expectation of freedom from 
unwelcome conduct in the home.\57\ The home is ``a place where [one is] 
entitled to feel safe and secure and need not flee.'' \58\ To adopt 
Title VII's affirmative defense under the Fair Housing Act would be to 
ignore these important rights and the distinction between the home and 
public places, and the differences in the enforcement regimes of the 
two statutes.
---------------------------------------------------------------------------

    \57\ Frisby, at 484.
    \58\ Quigley v. Winter, 598 F. 3d 938, 947 (8th Cir. 2010) 
(sexual harassment violation of Act).
---------------------------------------------------------------------------

IV. Findings and Certifications

Regulatory Review--Executive Orders 12866 and 13563

    Under Executive Order 12866 (Regulatory Planning and Review), a 
determination must be made whether a regulatory action is significant 
and therefore, subject to review by the Office of Management and Budget 
(OMB) in accordance with the requirements of the order. Executive Order 
13563 (Improving Regulations and Regulatory Review) directs executive 
agencies to analyze regulations that are ``outmoded, ineffective, 
insufficient, or excessively burdensome, and to modify, streamline, 
expand, or repeal them in accordance with what has been learned. 
Executive Order 13563 also directs that, where relevant, feasible, and 
consistent with regulatory objectives, and to the extent permitted by 
law, agencies are to identify and consider regulatory approaches that 
reduce burdens and maintain flexibility and freedom of choice for the 
public. This rule was determined to be a ``significant regulatory 
action'' as defined in section 3(f) of Executive Order (although not an 
economically significant regulatory action, as provided under section 
3(f)(1) of the Executive Order).
    This rule establishes uniform standards for use in investigations 
and processing cases involving harassment and liability under the Fair 
Housing Act. As has been discussed in the preamble to this rule, in 
establishing such standards, HUD is exercising its rulemaking authority 
to bring uniformity, clarity, and certainty to an area of legal 
practice.
    The docket file for this rule is available for public inspection 
between the hours of 8 a.m. and 5 p.m. weekdays in the Regulations 
Division, Office of General Counsel, Department of Housing and Urban 
Development, Room 10276, 451 7th Street SW., Washington, DC 20410-0500. 
Due to security measures at the HUD Headquarters building, please 
schedule an appointment to review the docket file by calling the 
Regulations Division at 202-708-3055 (this is not a toll-free number). 
Persons with hearing or speech impairments may access the above 
telephone number via TTY by calling the toll-free Federal Relay Service 
at 800-877-8339.

Environmental Impact

    This rule does not direct, provide for assistance or loan and 
mortgage insurance for, or otherwise govern or regulate, real property 
acquisition, disposition, leasing, rehabilitation, alteration, 
demolition or new construction, or establish, revise, or provide for 
standards for construction or construction materials, manufactured 
housing, or occupancy. This rule is limited to the procedures governing 
fair housing enforcement. Accordingly, under 24 CFR 50.19(c)(3), this 
rule is categorically excluded from environmental review under the 
National Environmental Policy Act (42 U.S.C. 4321).

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 4321, et seq.) generally 
requires an agency to conduct a regulatory flexibility analysis of any 
rule subject to notice and comment rulemaking requirements, unless the 
agency certifies that the rule will not have a significant economic 
impact on a substantial number of small entities. The proposed rule 
establishes standards for evaluating claims of harassment and liability 
under the Fair Housing Act. The scope of the rule is procedural, and 
the regulatory changes do not establish any substantive regulatory 
burdens on small entities. Accordingly, the undersigned certifies that 
this rule will not have a significant economic impact on a substantial 
number of small entities.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1531-1538) (UMRA) establishes requirements for federal agencies to 
assess the effects of their regulatory actions on state, local, and 
tribal governments and the private sector. This proposed rule does not 
impose any federal mandates on any state, local, or tribal governments 
or the private sector within the meaning of UMRA.

Executive Order 13132, Federalism

    Executive Order 13132 (entitled ``Federalism'') prohibits an agency 
from publishing any rule that has federalism implications if the rule 
either (1) imposes substantial, direct compliance costs on state and 
local governments, and is not required by statute, or (2) preempts 
state law, unless the agency meets the consultation and funding 
requirements of section 6 of the Executive Order. This rule would not 
have federalism implications and would not impose substantial direct 
compliance costs on state and local governments or preempt state law 
within the meaning of the Executive Order.

[[Page 63730]]

Catalogue of Federal Domestic Assistance

    The Catalogue of Federal Domestic Assistance Number for the equal 
opportunity in housing program is 14.400.

List of Subjects in 24 CFR Part 100

    Aged, Fair housing, Individuals with disabilities, Mortgages, 
Reporting and recordkeeping requirements.

    Accordingly, for the reasons stated in the preamble, HUD proposes 
to amend 24 CFR part 100 to read as follows:

 PART 100--DISCRIMINATORY CONDUCT UNDER THE FAIR HOUSING ACT

0
1. The authority citation for 24 CFR part 100 continues to read as 
follows:

    Authority: 42 U.S.C. 3535(d), 3600-3620.

0
2. Add Sec.  100.7 to read as follows:


Sec.  100.7  Liability for discriminatory housing practices.

    (a) Direct liability. (1) A person is directly liable for:
    (i) The person's own conduct that results in a discriminatory 
housing practice.
    (ii) Failing to take prompt action to correct and end a 
discriminatory housing practice by that person's employee or agent, 
where the person knew or should have known of the discriminatory 
conduct.
    (iii) Failing to fulfill a duty to take prompt action to correct 
and end a discriminatory housing practice by a third-party, where the 
person knew or should have known of the discriminatory conduct. The 
duty to take prompt action to correct and end a discriminatory housing 
practice by a third-party can derive from an obligation to the 
aggrieved person created by contract or lease (including bylaws or 
other rules of a homeowners association, condominium or cooperative), 
or by federal, state or local law.
    (2) For purposes of determining liability under paragraphs 
(a)(1)(ii) and (iii) of this section, prompt action to correct and end 
the discriminatory housing practice may not include any action that 
penalizes or harms the aggrieved person, such as eviction of the 
aggrieved person.
    (b) Vicarious liability. A person is vicariously liable for a 
discriminatory housing practice by the person's agent or employee, 
regardless of whether the person knew or should have known of the 
conduct that resulted in a discriminatory housing practice, consistent 
with agency law.
0
3. In Sec.  100.60, add paragraphs (b)(6) and (7) to read as follows:


Sec.  100.60  Unlawful refusal to sell or rent or to negotiate for the 
sale or rental.

* * * * *
    (b) * * *
    (6) Conditioning the availability of a dwelling, including the 
price, qualification criteria, or standards or procedures for securing 
the dwelling, on a person's response to harassment because of race, 
color, religion, sex, handicap, familial status, or national origin.
    (7) Subjecting a person to harassment because of race, color, 
religion, sex, handicap, familial status, or national origin that 
causes the person to vacate a dwelling or abandon efforts to secure the 
dwelling.
0
4. In Sec.  100.65, add paragraphs (b)(6) and (7) to read as follows:


Sec.  100.65  Discrimination in terms, conditions and privileges and in 
services and facilities.

* * * * *
    (b) * * *
    (6) Conditioning the terms, conditions, or privileges relating to 
the sale or rental of a dwelling, or denying or limiting the services 
or facilities in connection therewith, on a person's response to 
harassment because of race, color, religion, sex, handicap, familial 
status, or national origin.
    (7) Subjecting a person to harassment because of race, color, 
religion, sex, handicap, familial status, or national origin that has 
the effect of imposing different terms, conditions, or privileges 
relating to the sale or rental of a dwelling or denying or limiting 
service or facilities in connection with the sale or rental of a 
dwelling.
0
5. In Sec.  100.80, add paragraph (b)(6) to read as follows:


Sec.  100.80  Discriminatory representation on the availability of 
dwellings.

* * * * *
    (b) * * *
    (6) Representing to an applicant that a unit is unavailable because 
of the applicant's response to a request for a sexual favor or other 
harassment because of race, color, religion, sex, handicap, familial 
status, or national origin.
0
6. In Sec.  100.90, add paragraphs (b)(5) and (6) to read as follows:


Sec.  100.90  Discrimination in the provision of brokerage services.

* * * * *
    (b) * * *
    (5) Conditioning access to brokerage services on a person's 
response to harassment because of race, color, religion, sex, handicap, 
familial status, or national origin.
    (6) Subjecting a person to harassment because of race, color, 
religion, sex, handicap, familial status, or national origin that has 
the effect of discouraging or denying access to brokerage services.
0
7. In Sec.  100.120, add paragraphs (b)(3) and (4) to read as follows:


Sec.  100.120  Discrimination in the making of loans and in the 
provision of other financial assistance.

* * * * *
    (b) * * *
    (3) Conditioning the availability of a loan or other financial 
assistance on a person's response to harassment because of race, color, 
religion, sex, handicap, familial status, or national origin.
    (4) Subjecting a person to harassment because of race, color, 
religion, sex, handicap, familial status, or national origin that 
affects the availability of a loan or other financial assistance.
0
8. In Sec.  100.130, add paragraphs (b)(4) and (5) to read as follows:


Sec.  100.130  Discrimination in the terms and conditions for making 
available loans or other financial assistance.

* * * * *
    (b) * * *
    (4) Conditioning the aspect of a loan or other financial assistance 
to be provided with respect to a dwelling, or the terms or conditions 
thereof, on a person's response to harassment because of race, color, 
religion, sex, handicap, familial status, or national origin.
    (5) Subjecting a person to harassment because of race, color, 
religion, sex, handicap, familial status, or national origin that has 
the effect of imposing different terms or conditions for the 
availability of such loans or other financial assistance.
0
9. In Sec.  100.135, revise paragraph (d) to read as follows:


Sec.  100.135  Unlawful practices in the selling, brokering, or 
appraising of residential real property.

* * * * *
    (d) Practices which are unlawful under this section include, but 
are not limited to:
    (1) Using an appraisal of residential real property in connection 
with the sale, rental, or financing of any dwelling where the person 
knows or reasonably should know that the appraisal improperly takes 
into consideration race, color, religion, sex, handicap, familial 
status, or national origin.
    (2) Conditioning the terms of an appraisal of residential real 
property in connection with the sale, rental, or

[[Page 63731]]

financing of a dwelling on a person's response to harassment because of 
race, color, religion, sex, handicap, familial status, or national 
origin.
0
10. Add subpart H, consisting of Sec.  100.600, to read as follows:

Subpart H-- Quid Pro Quo and Hostile Environment Harassment


Sec.  100.600  Quid pro quo and hostile environment harassment.

    (a) General. Quid pro quo and hostile environment harassment 
because of race, color, religion, sex, familial status, national origin 
or handicap may violate sections 804, 805, 806 or 818 of the Act, 
depending on the conduct. The same conduct may violate one or more of 
these provisions.
    (1) Quid pro quo harassment. Quid pro quo harassment refers to an 
unwelcome request or demand to engage in conduct where submission to 
the request or demand, either explicitly or implicitly, is made a 
condition related to: The sale, rental or availability of a dwelling; 
the terms, conditions, or privileges of the sale or rental, or the 
provision of services or facilities in connection therewith; or the 
availability, terms, or conditions of a residential real estate-related 
transaction. An unwelcome request or demand may constitute quid pro quo 
harassment even if a person acquiesces in the unwelcome request or 
demand.
    (2) Hostile environment harassment. Hostile environment harassment 
refers to unwelcome conduct that is sufficiently severe or pervasive as 
to interfere with: the availability, sale, rental, or use or enjoyment 
of a dwelling; the terms, conditions, or privileges of the sale or 
rental, or the provision or enjoyment of services or facilities in 
connection therewith; or the availability, terms, or conditions of a 
residential real estate-related transaction. Hostile environment 
harassment does not require a change in the economic benefits, terms, 
or conditions of the dwelling or housing-related services or 
facilities, or of the residential real-estate transaction.
    (i) Totality of the circumstances. Whether hostile environment 
harassment exists depends upon the totality of the circumstances.
    (A) Factors to be considered to determine whether hostile 
environment harassment exists include, but are not limited to, the 
nature of the conduct, the context in which the incident(s) occurred, 
the severity, scope, frequency, duration, and location of the conduct, 
and the relationships of the persons involved.
    (B) Evidence of psychological or physical harm is relevant in 
determining whether a hostile environment was created, as well as the 
amount of damages to which an aggrieved person may be entitled. 
However, neither psychological nor physical harm must be demonstrated 
to prove that a hostile environment exists.
    (ii) Title VII affirmative defense. The affirmative defense to an 
employer's vicarious liability for hostile environment harassment by a 
supervisor under Title VII of the Civil Rights Act of 1964 does not 
apply to cases brought pursuant to the Fair Housing Act.
    (b) Type of conduct. Harassment can be written, verbal, or other 
conduct, and does not require physical contact.
    (c) Number of incidents. A single incident of harassment because of 
race, color, religion, sex, familial status, national origin, or 
handicap may constitute a discriminatory housing practice, where the 
incident is severe, or evidences a quid pro quo.

    Dated: September 28, 2015.
Gustavo Velasquez,
Assistant Secretary for Fair Housing and Equal Opportunity.
[FR Doc. 2015-26587 Filed 10-20-15; 8:45 am]
 BILLING CODE 4210-67-P