[Federal Register Volume 91, Number 9 (Wednesday, January 14, 2026)]
[Proposed Rules]
[Pages 1475-1477]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2026-00590]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Part 100
[Docket No. FR-6540-P-01]
RIN 2529-AB09
HUD's Implementation of the Fair Housing Act's Disparate Impact
Standard
AGENCY: Office of the Assistant Secretary for Fair Housing and Equal
Opportunity, Department of Housing and Urban Development (HUD).
ACTION: Proposed rule.
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SUMMARY: The Fair Housing Act prohibits discrimination in the sale,
rental, or financing of dwellings and in other housing-related
activities. Since 2013, HUD has issued three final rules for
determining whether a given practice has an unjustified discriminatory
effect under the Fair Housing Act, even where practices were not
motivated by discriminatory intent. These rules formalized legal tests
that were not explicit in statute and imposed a presumption of unlawful
discrimination when any variance in outcomes exists among protected
classes, even without a showing of a facially discriminatory policy or
discriminatory intent. Through this rulemaking, HUD is proposing to
remove its discriminatory effects regulations and leaving to courts
questions related to interpretations of disparate impact liability
under the Fair Housing Act.
DATES: Comment Due Date: February 13, 2026.
ADDRESSES: Interested persons are invited to submit comments regarding
this proposed rule. All submissions must refer to the docket number and
title. There are two methods for submitting public comments.
1. Electronic Submission of Comments. Interested persons may submit
comments electronically through the Federal eRulemaking Portal at
https://www.regulations.gov.
2. 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.
In accordance with 5 U.S.C. 553(b)(4), a summary of this proposed
rule may be found at www.regulations.gov.
FOR FURTHER INFORMATION CONTACT: Scott Knittle, Principal Deputy
General Counsel, U.S. Department of Housing and Urban Development, 451
7th Street SW, Washington, DC 20410; telephone number (202) 402-2244
(this is not a toll-free number). HUD welcomes and is prepared to
receive calls from individuals who are deaf or hard of hearing, as well
as individuals with speech or communication disabilities. To learn more
about how to make an accessible telephone call, please visit https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs.
SUPPLEMENTARY INFORMATION:
I. Background
Title VIII of the Civil Rights Act of 1968, as amended (``the Fair
Housing Act'' or ``the Act''), prohibits discrimination in the sale,
rental, or financing of dwellings and in other housing-related
activities on the basis of race, color, religion, sex, disability,
familial status, or national origin.\1\ On February 15, 2013, at 78 FR
11460, HUD published a final rule entitled ``Implementation of the Fair
Housing Act's Discriminatory Effects Standard'' (``the 2013 rule'').
The 2013 rule established regulations in 24 CFR part 100 to formalize
an interpretation that discriminatory effect, or disparate impact,
liability is cognizable under the Act. It also codified a burden-
shifting framework onto the defendant for analyzing disparate impact
claims, relying in part on existing case law under the Fair Housing
Act, decisions by HUD's administrative law judges, and Title VII of the
Civil Rights Act of 1964 (which relates to employment
discrimination).\2\
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\1\ 42 U.S.C. 3601-3619, 3631. This preamble uses the term
``disability'' to refer to what the Act and its implementing
regulations term a ``handicap.'' See, e.g., Hunt v. Aimco Props.,
L.P., 814 F.3d 1213, n.1 (11th Cir. 2016) (noting the term
disability is generally preferred over handicap).
\2\ See 24 CFR 100.500(c). In 2016, HUD also published a notice
that supplemented its responses to certain comments made by the
insurance industry during the rulemaking. See ``Application of the
Fair Housing Act's Discriminatory Effects Standard to Insurance,''
81 FR 69012 (Oct. 5, 2016).
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In 2015, the Supreme Court held that disparate impact claims are
cognizable under the Fair Housing Act in Texas Department of Housing
and Community Affairs v. Inclusive Communities Project, Inc.,
(Inclusive Communities).\3\ In this case, the Court discussed the
standards for, and constitutional questions and necessary limitations
regarding, disparate impact claims. On June 20, 2018, at 83 FR 28560,
HUD published an advance notice of proposed rulemaking (``ANPRM'')
inviting public comment on ``what changes, if any'' to the 2013 rule
were necessary as a result of Inclusive Communities. Following the
ANPRM and a subsequent proposed rule published on August 19, 2019, at
84 FR 42854, HUD published a final rule titled ``HUD's Implementation
of the Fair Housing Act's Disparate Impact Standard'' on September 24,
2020 (``the 2020 rule'') at 84 FR 42854. The 2020 rule amended HUD's
disparate impact regulations to implement the Supreme Court's decision
in Inclusive Communities and to provide clarification regarding the
application of the standard to State laws governing the business of
insurance.
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\3\ 576 U.S. 519, 519, 532-35 (2015).
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Prior to the effective date of the 2020 Rule, the U.S. District
Court for the District of Massachusetts in Massachusetts Fair Housing
Ctr. v. HUD issued a preliminary injunction staying the implementation
and postponing the effective date of the 2020 Rule.\4\
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\4\ Mass. Fair Hous. Ctr. v. United States HUD, 496 F. Supp. 3d
600, 611 (D. Mass. Oct. 25, 2020).
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Pursuant to a Presidential Memorandum issued on January 26, 2021,
at 86 FR 7487, HUD published a proposed rule at 86 FR 33590 to
[[Page 1476]]
reinstate the 2013 rule, followed by a final rule titled
``Reinstatement of HUD's Discriminatory Effects Standard'' on March 31,
2023 (``the 2023 rule'') at 88 FR 19450.
II. Justification for Rulemaking
Several factors have prompted HUD to reconsider its discriminatory
effects regulations. On April 23, 2025, the President issued Executive
Order 14281 titled ``Restoring Equality of Opportunity and
Meritocracy'' (``E.O. 14281'').\5\ The Executive Order states that
equal treatment under the law is a ``bedrock principle of the United
States'' which ``guarantees equality of opportunity, not outcomes.''
\6\ The Order asserts that disparate impact liability ``endangers this
foundational principle'' by creating a ``near insurmountable
presumption of discrimination'' when there are any differences in
outcomes, ``even if there is no facially discriminatory policy or
practice or discriminatory intent involved, and even if everyone has an
equal opportunity to succeed.'' \7\ As such, the Order established that
``it is the policy of the United States to eliminate the use of
disparate-impact liability in all contexts to the maximum degree
possible to avoid violating the Constitution, Federal civil rights
laws, and basic American ideals.'' \8\
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\5\ Executive Order 14281 was published in the Federal Register
at 90 FR 17537 on April 28, 2025
\6\ Id.
\7\ Id.
\8\ Id.
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E.O. 14281 instructs all federal agencies including HUD to, in
coordination with the Attorney General, review existing regulations and
rules that impose disparate impact liability and consider amendment or
repeal of these regulations as appropriate under applicable law.
Consistent with this, HUD has reviewed its disparate impact regulations
and related prior rulemakings and determined they are unnecessary.
HUD's prior assertion, that its disparate impact regulations provided
clarity and predictability for all parties engaged in housing
transactions (78 FR 11460), is diminished by the facts that case law
continues to develop and HUD's regulation does not provide an up-to-
date picture of the legal landscape. Furthermore, according to the
Supreme Court's decision in Loper Bright Enterprises v. Raimondo
(``Loper Bright''),\9\ federal agency interpretations of statutes and
agency actions that rely on them do not receive any judicial deference.
The reviewing court itself must determine the best interpretation of a
statute and then assess whether the challenged agency action falls
within the scope of that interpretation.\10\ A reviewing court is free
to consider, or not, an agency's interpretation, and in any case the
court may not simply defer to the agency's interpretations where the
court finds the underlying statute to be ambiguous.\11\ As a result,
HUD's prior disparate impact rulemakings, HUD's interpretation of the
Fair Housing Act, and the codification of that interpretation in
regulations, do not carry deferential weight. A reviewing court may
wholly reject HUD's claims in prior rulemakings that the regulations
provide greater clarity and predictability and may vacate or set aside
HUD's rules.\12\ It is appropriate for courts, not a Federal agency, to
make determinations related to the interpretation of disparate impact
liability under the Fair Housing Act. Additionally, consistent with the
current regulatory reform efforts and in accordance with Executive
Order 14192 of January 31, 2025 (``Unleashing Prosperity Through
Deregulation''), and Executive Order 14219 of February 19, 2025
(``Ensuring Lawful Governance and Implementing the President's
`Department of Government Efficiency' Deregulatory Initiative''), HUD
is undertaking a comprehensive review of its regulations to reduce
unnecessary regulatory burdens, enhance the effectiveness of those
regulations that are necessary, and promote principles underlying the
rule of law. Removing HUD's disparate impact regulations is consistent
with the principles of E.O. 14281 and regulatory reform efforts.
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\9\ 603 U.S. 369 (2024) (hereinafter ``Loper Bright'').
\10\ Id. at 395, 412-13.
\11\ See id. at 413.
\12\ E.g., Env't Def. Fund v. U.S. Env't Prot. Agency, 124 F.4th
1 (D.C. Cir. 2024) (final rule determined unlawful and parts of it
vacated); U.S. Sugar Corp. v. Env't Prot. Agency, 113 F.4th 984
(D.C. Cir. 2024) (per curiam) (final rule set aside in part).
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III. This Proposed Rule
Therefore, through this rulemaking, HUD is proposing to revise 24
CFR 100.5(b) and remove and reserve 24 CFR part 100, subpart G, which
contains Sec. 100.500. HUD is proposing to remove the second sentence
of Sec. 100.5(b), which states that illustrations of unlawful housing
discrimination in 24 CFR part 100 may be established by a practice's
discriminatory effect, even if not motivated by discriminatory intent,
consistent with the standards outlined in Sec. 100.500. Section
100.500 states that liability may be established under the Fair Housing
Act based on a housing practice's discriminatory effect, as defined in
paragraph (a) of Sec. 100.500, even if the practice was not motivated
by discriminatory intent; that the practice may still be lawful if
supported by a legally sufficient justification, as defined in
paragraph (b); and that the paragraph (c) lays out the burdens of proof
for establishing a violation under subpart G of part 100 of title 24 of
the Code of Federal Regulations.
IV. Justification for Shortened Comment Period
For HUD rules issued for public comment, it is HUD's policy to
afford the public ``not less than sixty days for submission of
comments'' (24 CFR 10.1). In cases in which HUD determines that a
shorter public comment period may be appropriate, it is also HUD's
policy to provide an explanation of why the public comment period has
been abbreviated.
This rule is a general statement of HUD's policy regarding
liability under the Fair Housing Act. Previously, Sec. 100.500 laid
out HUD's policy regarding its interpretation and enforcement of
discriminatory effects liability. HUD's general statement of policy now
is that this matter is best left to the courts. This document does not
change any requirements or affect any rights or obligations.
Additionally, HUD has thoroughly solicited and reviewed public
comments on the relevant topics and issues concerning disparate impact
liability under the Fair Housing Act and related proposals for HUD's
discriminatory effects regulations. In 2011, HUD published a proposed
rule that preceded HUD's 2013 rule, and the 2011 proposed rule
generated, and HUD reviewed, 96 public comments submitted by
individuals, fair housing and legal aid organizations, state and local
fair housing agencies, Attorneys General from several States, state
housing finance agencies, public housing agencies, public housing trade
associations, insurance companies, mortgage lenders, credit unions,
banking trade associations, real estate agents, and law firms. In 2019,
HUD published a proposed rule that preceded HUD's 2020 rule, and that
2019 proposed rule generated, and HUD reviewed, approximately 45,758
comments from a similarly wide variety of individuals and entities. In
2021, HUD published another proposed rule to reinstate HUD's 2013 rule.
Prior to publishing this proposed rule, HUD once again reviewed the
public comments received on the 2019 proposed rule in addition to HUD's
responses to those comments, legal precedent, and other relevant
materials. The 2021 proposed rule then generated
[[Page 1477]]
another 10,113 public comments submitted by a wide variety of
individuals and entities, which HUD reviewed prior to publishing the
2023 final rule. Public comments covered a vast array of topics and
issues, and many comments raised legal concerns including, for example,
relevant court opinions, State and local law concerns, and
interpretations of underlying legal authorities.
Given that this rulemaking does not change any requirements or
affect any rights or obligations, and given the volume of public
comments already submitted, the scope of issues and topics raised by
those comments, and HUD's thorough consideration of those comments and
other relevant materials over the course of several rulemakings, HUD
has determined that it is in the public interest to remove HUD's
disparate impact regulations as expeditiously as possible. As such,
while HUD seeks and values input in the form of public comments, HUD
has determined that a shortened public comment period is justified. In
this regard, HUD notes that interested members of the public are
familiar with these regulations and should be able to respond
effectively within the 30-day period.
V. Findings and Certifications
Regulatory Review--Executive Orders 12866 and 13563
Under Executive Order 12866 (Regulatory Planning and Review), a
determination must be made regarding whether a regulatory action is
significant and, therefore, subject to review by the Office of
Management and Budget in accordance with the requirements of the order.
This proposed rule was determined to be a significant regulatory action
under section 3(f) of Executive Order 12866, but not economically
significant.
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 identify and consider regulatory approaches
that reduce burdens and maintain flexibility and freedom of choice for
the public. As previously discussed, this proposed rule removes
unnecessary regulations and is consistent with Executive Order 13563.
Executive Order 14192, Regulatory Costs
Executive Order 14192, entitled ``Unleashing Prosperity Through
Deregulation,'' was issued on January 31, 2025. Section 3(c) of
Executive Order 14192 requires that any new incremental costs
associated with new regulations shall, to the extent permitted by law,
be offset by the elimination of existing costs associated with at least
10 prior regulations. This rule removes existing regulations and will
impose no regulatory costs.
Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 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.
This rule simply removes regulations that interpret legal standards. As
such, there is no change in burden for those involved in a challenged
practice. Accordingly, the undersigned certifies that the rule will not
have a significant economic impact on a substantial number of small
entities.
Environmental Impact
This proposed rule is a policy document that sets out
nondiscrimination standards. 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).
Federalism--Executive Order 13132
Executive Order 13132 (Federalism) prohibits an agency from
publishing any rule that has Federalism implications if the rule
either: (i) imposes substantial direct compliance costs on State and
local governments and is not required by statute, or (ii) preempts
State law, unless the agency meets the consultation and funding
requirements of section 6 of the Executive Order. This proposed rule
does not have Federalism implications and does not impose substantial
direct compliance costs on State and local governments or preempt State
law within the meaning of the Executive Order.
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 on the private sector. This proposed rule does
not impose any Federal mandates on any State, local, or Tribal
governments, or on the private sector, within the meaning of the UMRA.
List of Subjects in 24 CFR Part 100
Aged, Civil rights, 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 as follows:
PART 100--DISCRIMINATORY CONDUCT UNDER THE FAIR HOUSING ACT
0
1. The authority citation for part 100 continues to read as follows:
Authority: 42 U.S.C. 3535(d), 3600-3620.
Subpart A--General
0
2. Revise Sec. 100.5(b) to read as follows:
Sec. 100.5 Scope.
* * * * *
(b) This part provides the Department's interpretation of the
coverage of the Fair Housing Act regarding discrimination related to
the sale or rental of dwellings, the provision of services in
connection therewith, and the availability of residential real estate-
related transactions.
* * * * *
Subpart G--[Removed and Reserved]
0
3. Remove and reserve subpart G, consisting of Sec. 100.500.
Scott Turner,
Secretary.
[FR Doc. 2026-00590 Filed 1-13-26; 8:45 am]
BILLING CODE 4210-67-P