“Disparate impact” theory holds someone liable for discrimination for a race-neutral policy that statistically disadvantages a specific racial group — say, blacks score lower on a firefighter-promotion test than whites — even if that negative “impact” was neither foreseen nor intended. The application of this theory has been fraught with controversy, to say the least, but it comes up again and again, in contexts ranging from employment to education to voting.
While disparate impact claims have sometimes been sustained under the federal Fair Housing Act (which makes it unlawful to deny housing on the basis of race) since the 1970s, the Supreme Court has only recently agreed to decide whether these claims are lawful. Two years ago, the Court was about to hear such a case, Magner v. Gallagher, when the Justice Department, led by now-Labor Secretary Tom Perez, pressured the city of St. Paul, Minnesota to settle it. The same sort of political pressure is now being brought to bear on Mount Holly Township, New Jersey; supporters of disparate impact theory simply don’t think that it can survive legal scrutiny.
The current case involves a redevelopment plan for a blighted Mount Holly neighborhood (“the Gardens”) that would transform the neighborhood into mid-range single-family dwellings. (Thus far, the township has acquired 259 of 329 properties through various financial incentives, without yet resorting to eminent domain.) The Gardens’ residents sued, arguing that the redevelopment plan violated the FHA because a majority of them would not be able to afford the new homes.
The district court dismissed this argument, holding that the redevelopment plan affected Gardens residents equally, without regard to race, and was tied only to economic considerations. The court of appeals reversed that ruling, holding that the residents’ association had set out a case of discrimination under the theory of disparate impact because a majority of the affected residents were non-white.
Cato has now joined the Pacific Legal Foundation and four other public-interest organizations on an amicus brief arguing not only that disparate impact claims are impermissible under the text of the FHA, but that such claims force unconstitutional actions when applied to governments. Before putting race-neutral policies into effect, government agencies would have to determine whether a particular racial group would be disproportionately impacted and take steps to remedy that difference. By mandating an equality of ends — as opposed to an equality of opportunity — disparate impact liability encourages the adoption of discriminatory quota systems.