On April 23, 2025, President Trump issued an executive order eliminating disparate impact liability as the industry knows it. His executive order, Restoring Equality of Opportunity & Meritocracy, “eliminates 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.”
What the Order Requires
The Order directs all federal agencies to deprioritize enforcement. Within 30 days of the date of this order, the U.S. Attorney General, in coordination with agency heads, must report to the President about all existing regulations, guidance, rules or orders and steps to be taken for their amendment or repeal.
Within 45 days, the Attorney General, the heads of the U.S. Department of Housing & Urban Development, Consumer Financial Protection Bureau, Federal Trade Commission and all other department heads responsible for enforcement of the Equal Credit Opportunity Act, Title VIII of the Civil Rights Act of 1964 (the Fair Housing Act, or FHA), or laws prohibiting unfair, deceptive or abusive acts or practices must evaluate all pending proceedings that rely on theories of disparate impact liability and take appropriate action consistent with this policy.
Moreover, within 90 days, all agencies must evaluate existing consent judgments and permanent injunctions that rely on theories of disparate-impact liability and take appropriate action with respect to such matters consistent with the policy of this order.
In coordination with other agencies, the Attorney General is also ordered to determine whether any Federal authorities preempt State laws, regulations, policies, or practices that impose disparate-impact liability based on a federally protected characteristic such as race, sex, or age, or whether such laws, regulations, policies, or practices have “constitutional infirmities” that warrant Federal action, and take appropriate measures consistent with the policy of this order.
Background
In 2013, the U.S. Department of Housing and Urban Development (HUD) under the Obama Administration formalized a burden-shifting framework to assess claims where a neutral policy or practice disproportionately negatively affects protected classes under the FHA. Under the Trump Administration in 2020, HUD established important safeguards for disparate impact litigation, including more stringent requirements for plaintiffs and explicit defenses for housing providers to align with the Supreme Court's 2015 decision in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc. The Biden Administration reinstated the Obama rule, therefore rescinding the 2020 rule.
Also adding to housing providers’ federal fair housing compliance responsibilities, HUD subsequently issued its Office of General Counsel Guidance on Application of Fair Housing Act Standards to the Use of Criminal Records by Providers of Housing and Real Estate-Related Transactions during the Obama Administration. HUD argued that under the disparate impact theory of liability, housing providers which impose brightline rules denying housing based on an applicant’s criminal record history could be found in violation of the FHA. HUD General Counsel, Helen R. Kanovsky, further contended that housing providers should perform an individualized assessment as part of the resident screening process.
Industry Perspective
The National Apartment Association (NAA) and its members are committed to equal housing opportunity for all without regard to race, religion, color, sex, national origin, familial status or disability. However, NAA has maintained for years that more clarity is needed on the applicability of disparate impact liability, as it could be used to undermine housing providers' community policies and practices which serve legitimate, nondiscriminatory interests. Read more about NAA's latest outreach to President Trump and Secretary Turner on this matter.
NAA continues its advocacy with the Trump Administration and Congress to boost housing supply and reduce regulatory barriers that negatively impact the provision of rental housing and ultimately housing costs for renters. NAA is monitoring implementation of this order closely, and will keep our members informed of agency developments that would impact the industry’s compliance responsibilities.