Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc.

No. 13-1371. Argued January 21, 2015. Decided June 25, 2015. Certiorari to the United States Court of Appeals for the Fifth Circuit. Judgment affirmed and case remanded (747 Federal 3d 275, affirmed and remanded). Opinion of the Court by Justice Kennedy, in which Justices Ginsburg, Breyer, Sotomayor, and Kagan joined. Justice Thomas filed a dissenting opinion. Justice Alito filed a dissenting opinion, in which Chief Justice Roberts and Justices Scalia and Thomas joined.

Editorial note. The Federal Government provides low-income housing tax credits that are allocated to developers by designated state agencies; in Texas the Department of Housing and Community Affairs performs that function under criteria of its own devising. The Inclusive Communities Project, a nonprofit that assists low-income families in obtaining affordable housing, alleged that the Department had disproportionately approved credits for developments in predominantly minority inner-city neighbourhoods and disproportionately denied them in predominantly white suburban neighbourhoods, thereby perpetuating segregated housing patterns. The claim rested on statistical disparity rather than on any allegation of intentional discrimination.

Editorial note. The District Court found a prima facie case of disparate impact and held that the Department had failed to establish that its allocation criteria were necessary to achieve a substantial legitimate interest. The Court of Appeals for the Fifth Circuit held that disparate-impact claims are cognisable under the Act but remanded for application of the burden-shifting framework in the Department of Housing and Urban Development's regulation. The Supreme Court affirmed that disparate-impact claims are cognisable and remanded for further proceedings consistent with the limitations it identified.

Editorial note. Section 804(a) and § 805(a) of the Fair Housing Act, in making it unlawful to make housing unavailable or otherwise deny a dwelling 'because of' race, encompass claims based on discriminatory effects as well as claims of intentional discrimination. The rule derived carries express limitations. A plaintiff must show a causal connection between the challenged policy and the disparity, and a statistical showing alone will not suffice; the policy must be the cause of the disparity. A defendant must be given the opportunity to state and prove a valid interest served by the practice. Remedial orders must, where possible, avoid race-conscious relief and should ordinarily eliminate the offending practice rather than impose racial targets or quotas. Courts must guard against liability that would displace legitimate judgments about the siting, financing, and design of housing.

Editorial note. Justice Kennedy reasoned from the antecedent construction of the results-oriented language in Griggs v. Duke Power Co., 401 U.S. 424 (1971), and Smith v. City of Jackson, 544 U.S. 228 (2005), and from the Act's 'otherwise make unavailable' phrase, which he read as referring to consequences rather than to the actor's intent. He gave weight to the unanimous view of the courts of appeals before the 1988 amendments and to Congress's decision in those amendments to add exemptions that presuppose disparate-impact liability. He then devoted the balance of the opinion to the safeguards, explaining that unconstrained impact liability would raise serious constitutional questions by pressing governmental and private actors toward racial considerations, and that disparate impact is properly directed at artificial, arbitrary, and unnecessary barriers rather than at every policy with an unequal effect. Justice Thomas, dissenting, questioned the foundations of disparate-impact analysis generally. Justice Alito, dissenting, argued that the statutory text requires proof that a decision was made because of race.

Editorial note. Inclusive Communities is the modern terminus of the treatise's fair-housing sequence, which begins with Buchanan v. Warley, passes through Shelley v. Kraemer and Barrows v. Jackson, and includes the constitutional intent requirement of Village of Arlington Heights and the statutory route of Jones v. Alfred H. Mayer Co. It establishes that the Fair Housing Act reaches beyond intentional exclusion to policies whose operation perpetuates segregation, while framing that liability so that it addresses unnecessary barriers rather than every disparity. For land-use practice its significance lies in the causation requirement and in the treatment of remedies, which together determine when zoning, siting, and subsidy allocation decisions may be challenged on effects grounds.

Editorial note. Followed. Applied by the lower federal courts in evaluating impact challenges to zoning, occupancy, lending, and subsidy allocation practices, with the robust-causality requirement operating as the principal limitation at the pleading stage. The administrative burden-shifting standard has been revised by successive Department of Housing and Urban Development rulemakings without disturbing the statutory holding.

Editorial note. Read with the Fair Housing Act, 42 U.S.C. §§ 3601-3619, and the treatise chapters on fair housing and civil rights and on exclusionary zoning.