The public comment period has closed on HUD’s proposed rule that would remove the Department’s regulatory framework for evaluating disparate impact claims under the Fair Housing Act. No final rule has been issued. This post summarizes the proposal, the surrounding enforcement context, and what PHAs should watch as the process continues.
Background on the Proposed Rule
On January 14, 2026, HUD published a proposed rule in the Federal Register that would eliminate the agency’s existing regulations governing discriminatory effects claims under the Fair Housing Act of 1968. Specifically, the proposal would remove 24 CFR Part 100, Subpart G, which contains the regulatory standard HUD has used to evaluate whether a facially neutral policy produces an unjustified discriminatory effect on a protected class.
Under the proposal, HUD would no longer maintain a codified test for disparate impact. The Department’s position is that courts, not federal agencies, should determine how disparate impact liability applies under the Fair Housing Act. HUD cited Executive Order 14281, titled “Restoring Equality of Opportunity and Meritocracy,” and the Supreme Court’s June 2024 Loper Bright decision, which overturned the Chevron deference doctrine and shifted interpretive authority over ambiguous federal statutes back to the courts.
The Broader Enforcement Context
The past year has marked a period of significant transition in HUD’s administration and enforcement of federal fair housing policy. In addition to proposing removal of its disparate impact regulations, HUD:
- Revised HUD’s AFFH regulations and replaced the 2021 framework
- Withdrew numerous Fair Housing and Equal Opportunity (FHEO) guidance documents, on topics addressing:
- Assistance animals and reasonable accommodations
- Criminal records in housing decisions
- Gender identity and sexual orientation protections
- Digital housing advertising and algorithmic discrimination
- Limited English proficiency (LEP) and national origin discrimination
- Source of income testing under the Fair Housing Assistance Program (FHAP)
- Special Purpose Credit Programs
- Fair housing considerations for lending and real estate-related transactions
- Proposed revisions to Equal Access requirements affecting gender identity protections in certain HUD-assisted shelter and housing programs
These actions reflect a broader recalibration of the federal government’s approach to disparate impact and fair housing enforcement. Following Executive Order 14281, multiple federal agencies have begun reevaluating regulations and guidance that rely on disparate impact theories, while recently proposed revisions to Office of Management and Budget (OMB) regulatory review guidance similarly emphasize a reduced reliance on disparate impact analysis in federal policymaking.
Parallel policy developments have already prompted legal challenges. On March 16, 2026, a coalition of 16 attorneys general from 15 states and the District of Columbia filed suit in the U.S. District Court for the Northern District of California challenging HUD’s September 2025 enforcement guidance. The complaint alleges that HUD unlawfully threatened to decertify state and local fair housing agencies and condition Fair Housing Assistance Program funding on limiting enforcement to protections recognized under federal law. The litigation underscores that HUD’s evolving fair housing policies are being tested in the courts independently of the pending disparate impact rulemaking.
What the Proposal Would and Would Not Change
If finalized, the rule would remove HUD’s regulatory framework for evaluating discriminatory effects claims by eliminating 24 CFR Part 100, Subpart G. It would not amend the Fair Housing Act or eliminate disparate impact claims under the Act. Instead, HUD states that questions regarding the interpretation of disparate impact liability should be resolved by the courts rather than through agency regulations. The Department cites the Supreme Court’s decision in Loper Bright Enterprises v. Raimondo (2024), which held that courts should independently interpret ambiguous federal statutes rather than defer to agency interpretations.
The U.S. Supreme Court’s decision in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc. (2015), which recognized disparate impact claims under the Fair Housing Act, remains binding judicial precedent. If HUD removes its regulations, courts would continue evaluating disparate impact claims based on existing case law while further developing the legal standards through future litigation. Without a uniform federal regulatory framework, legal interpretations could become less consistent across jurisdictions over time.
State and local fair housing laws would not be affected by HUD’s proposed rule. Many states and local governments maintain their own fair housing statutes, some of which provide broader protections or independent disparate impact standards. PHAs should continue evaluating compliance under applicable federal, state, and local fair housing requirements regardless of the outcome of this rulemaking.
Public Comment and What Comes Next
The public comment period closed on February 13, 2026. HUD received more than 1,100 public comments from civil rights organizations, housing advocacy groups, industry associations, and policy organizations. Groups on both sides submitted formal comments, with perspectives ranging from concerns that removing the regulatory framework would reduce protections against systemic discrimination, to arguments that the current standard creates undue exposure for facially neutral policies.
HUD must now review all submitted comments before determining whether to finalize, revise, or withdraw the proposal. At the same time, litigation challenging other aspects of HUD’s fair housing enforcement policies is already underway. A concurrent rulemaking process and related litigation are poised to shape the evolving contours of federal fair housing policy.
What PHAs Should Watch
PHAs do not have new compliance obligations at this stage. The rulemaking is not complete, and the outcome remains uncertain.
As this process moves forward, housing professionals should:
- Monitor for a final rule and any related litigation
- Review internal fair housing policies against both federal standards and applicable state requirements
- Consult legal counsel with specific compliance questions about how internal policies and procedures may be affected
The current regulatory standards codified in 24 CFR Part 100, Subpart G, remain in force throughout the pendency of the rulemaking process.
Resources to Support Your Team
For PHAs that want to stay ahead of HUD’s compliance signals without monitoring every notice in real time, AMA Consulting Group’s Affordable Housing Policy Alerts deliver curated regulatory updates straight to your inbox.
When Additional Support May Make Sense
Federal housing policy changes often raise operational and compliance questions for agencies and housing providers. Advisory support may help organizations:
- Interpret evolving federal housing policy
- Evaluate compliance implications for internal policies and procedures
- Prepare for potential regulatory or legal shifts
- Review fair housing policies against changing federal and state standards
AMA works with housing organizations to provide policy analysis and operational guidance aligned with federal housing regulations.
Additional Reading
HUD Comment Coverage:
This article is intended as general information and does not replace HUD regulations or official guidance.