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Mt. Holly and “Disparate Impact”

This year the Supreme Court had agreed to resolve a fundamental question about the Fair Housing Act that it has never answered: Can you be found guilty of racial discrimination if you have not engaged in racial discrimination?

Suppose, for example, that the owner of an apartment complex decides that she does not want to rent units to individuals who have been convicted of drug offenses. She makes that decision without regard to race, her policy on its face does not treat people differently because of race, and indeed she enforces it in an evenhanded way, so that it applies equally to all applicants, without regard to race. Should she be liable for racial discrimination under the Fair Housing Act if it turns out that the policy in her neck of the woods has a disproportionate effect on this or that racial or ethnic group?

The Obama administration and the civil-rights establishment say, “Yes,” even though most everyone else would say, “No.” The administration and the civil-rights groups are afraid, in particular, that the Supreme Court will answer the question, “No,” too, and so they want very much to keep the Court from resolving this issue.


As a result, they pressured the City of St. Paul recently into withdrawing its case presenting this important issue, which the Court had already accepted for review — essentially by offering St. Paul a $180 million deal (the administration backed out of an entirely different case in which U.S. taxpayers stood to recover that amount of money, in exchange for the city withdrawing its case from the Court).

As it happened, however, there was another case, presenting this same issue, which the Court then accepted for review this year, which was fully briefed, and which was scheduled for oral argument in just two weeks, on December 4. It involves another town: Mount Holly, New Jersey.

But guess what:  The Mount Holly township council, at the eleventh hour last week, approved a settlement agreement in its case, which again denies the Supreme Court the opportunity to decide this issue, which is of great importance to many cities and towns, not to mention owners of apartment buildings and other real estate, banks and insurance companies that do real-estate-related business, and of course many other Americans, like those living in apartment buildings who would prefer not to share living space with drug dealers.

The settlement negotiations with the Mount Holly township council had been shrouded in secrecy. So here are some questions that the township council and other involved parties should answer for public discussion:
1. Was the Obama administration involved in pressuring the township to settle the case?
2. Likewise, what pressure did the civil-rights establishment brought to bear?
3. How, exactly, did this proposed settlement get put together?
4. To the extent that money is the reason for the settlement, what consideration was given to exploring financial terms from other sources that might not have required the township to scuttle a case most thought it was likely to win?
5. What other quid pro quos were involved here, like promises of future political support — or political revenge?
6. What consideration was given to the fact that leaving this legal issue unresolved favorably to the city may result in future lawsuits against it, like the one in this case?
7. What consideration has been given to the fact that leaving this legal issue unresolved hurts individuals and individuals’ businesses, particularly in Mount Holly but also elsewhere?

It is really very unseemly that these cases keep waking up dead just before the Supreme Court is about to decide them. The public ought to be provided with the details of what’s going on here.  Fortunately, the House Committee on Oversight and Government Reform last week opened an investigation.

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I spoke about the Mt. Holly case on a Wall Street Journal television interview last week, which you can watch here.  And I spoke more broadly about the whole problem with the disparate-impact approach to civil-rights enforcement here, on a panel last week at the Federalist Society’s annual convention (my prepared remarks are from 00:04:58 through 00:16:20, but there’s also a spirited discussion among the panelists, and with questions from the audience, that begins at around the 00:57:00 mark; my final remarks start at 1:42:50). 

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In my Federalist Society remarks above, I mentioned the Employment Non-Discrimination Act, which would make it illegal as a matter of federal employment law to discriminate on the basis of “sexual orientation” or “gender identity.”  This bill has been around for quite a while, and I’ve written about it here and here and here.  Alas, the bill just keeps getting worse.

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Finally, conservative Commissioners Todd Gaziano, Gail Heriot, Peter Kirsanow, and Abigail Thernstrom of the U.S. Commission on Civil Rights have submitted this incisive comment — which CEO has posted on its website — regarding an issue that I wrote about last month, here. In brief, recently a number of Obama administration agencies with financial-sector regulatory responsibilities jointly published in the Federal Register a proposed “Policy Statement Establishing Joint Standards for Assessing the Diversity Policies and Practices of Entities Regulated by the Agencies.” The statement is every bit as bad as you would think, and the comment by the commissioners is every bit as good. 

Comments on the proposed statement are due by Christmas Eve, and here’s hoping that the government receives more feedback like the commissioners’ excellent letter.  In that spirit, the Center for Equal Opportunity has submitted this comment:

We agree with and hereby incorporate by reference the letter of November 4, 2013, you received from United States Commission on Civil Rights members Abigail Thernstrom, Todd Gaziano, Gail Heriot, and Peter Kirsanow that discusses how the statement needs to be changed so that it does not encourage discrimination, preferences, and classifications on the basis of race, ethnicity, and sex.

In addition, the proposed statement appears to assert authority over regulated entities (as opposed to the regulatory agencies themselves) that exceeds the government’s statutory authority under Section 342 of the Dodd-Frank legislation, especially with regard to workforce practices.  For example, the authority provided for the latter (see Section 342 (b) (2) (C)) is limited to “ASSESSING the diversity policies and practices of entities regulated by the agency,” but the proposed statement is likely to be read as listing a number of dubious policies that are REQUIRED or at least ENCOURAGED for them (and, for a regulated entity, the distinction between being encouraged by a regulator to do something and being required is a fine one indeed).  In this regard, we also think id. (4) is important:   “Rule of Construction. – Nothing in paragraph (2)(C) may be construed … to require any specific action based on the findings of the assessment.”  The process described by the statute involves information gathering and analysis — not a government push to adopt politically correct (but legally dubious) practices that are not contemplated by this statute and are contrary to or at least in tension with other federal laws (see USCCR letter, cited above).

There should likewise be a tight fit between the statute and any nonstatutory guidance with respect to contracting, and any guidance should follow the statute’s distinctions between regulating agencies versus regulated entities, workforce requirements versus contracting requirements, contracts and contracting practices by regulating entities versus contracts and contracting practices by regulated entities, and so forth.

Thank you very much for your attention to our concerns.