## Facts

- Texas Department of Housing and Community Affairs (TDHCA) administered the federal Low-Income Housing Tax Credit (LIHTC) program in Texas by allocating tax credits to developers of low-income housing.
- Inclusive Communities Project, Inc. (ICP), a nonprofit assisting low-income families seeking housing in predominantly white suburban neighborhoods, challenged TDHCA’s allocation practices under the Fair Housing Act (FHA), 42 U.S.C. §§ 3601–3619.
- ICP alleged TDHCA disproportionately approved LIHTC developments in predominantly Black, inner-city neighborhoods and disproportionately denied credits for predominantly white suburban areas, perpetuating residential segregation.
- ICP relied largely on statistical evidence, including that most LIHTC units in Dallas were placed in census tracts with less than 50% Caucasian residents.
- The district court found ICP established a prima facie disparate-impact case and ruled for ICP under a burden-shifting approach requiring TDHCA to show no less discriminatory alternatives existed.
- The Fifth Circuit agreed the FHA allows disparate-impact claims but held the district court used an overly demanding standard and indicated a HUD disparate-impact regulation supplied the relevant framework.
- The Supreme Court granted certiorari to decide whether disparate-impact claims are cognizable under the FHA and, if so, what limits apply.

## Issues

1. Whether the Fair Housing Act authorizes disparate-impact (effects-based) claims absent proof of discriminatory intent.
2. What standards and limiting requirements govern FHA disparate-impact liability, including causation, identification of a challenged policy, and the role of justifications and alternatives.
3. How courts should avoid remedies and interpretations that would pressure actors into racial quotas or create constitutional concerns.

## Decision

- The Court held (5–4) that disparate-impact claims are cognizable under the FHA.
- The Court affirmed in part and remanded for further proceedings because the lower courts needed to reassess the claim under clarified, limiting standards.
- The Court required a robust causation showing tied to a specific policy or practice; a statistical disparity alone is insufficient.
- The Court directed that liability be confined to policies that create “artificial, arbitrary, and unnecessary barriers” to fair housing.
- The Court endorsed a burden-shifting approach permitting defendants to justify challenged practices with substantial, legitimate, nondiscriminatory interests and permitting plaintiffs to show less discriminatory alternatives.
- The Court cautioned against interpretations or remedies that function as racial targets or quotas and instructed courts to allow leeway for legitimate governmental and private decisionmaking.

## Legal Principles

- The FHA’s text and structure permit disparate-impact claims, and Congress’s 1988 amendments were treated as confirming that understanding in light of then-existing appellate consensus.
- A disparate-impact plaintiff must identify a specific, facially neutral policy or practice and show a causal connection between that policy and a statistical disparity.
- Disparate-impact liability is limited to policies that operate as “artificial, arbitrary, and unnecessary barriers,” protecting ordinary business and governmental choices from being treated as unlawful solely because they correlate with disparities.
- Courts should apply a burden-shifting framework: (1) plaintiff shows a policy-caused disparate impact; (2) defendant shows the policy is necessary to achieve substantial, legitimate, nondiscriminatory interests; (3) plaintiff shows an available alternative that serves those interests with less disparate impact.
- Courts must avoid remedies that require racial balancing, targets, or quotas, and must account for constitutional constraints when fashioning relief.

## Conclusion

The Supreme Court recognized disparate-impact liability under the Fair Housing Act but required strict limits—policy identification, robust causation, and a structured justification-and-alternatives inquiry—to prevent the doctrine from producing quota-like outcomes or displacing legitimate housing and development decisions.


Tex. Dep’t of Hous. & Cmty. Affs. v. Inclusive Cmtys. Project, Inc., 576 U.S. 519 (2015)