Under the leadership of Attorney General Pam Bondi, the Department of Justice (DOJ) acted Tuesday to eliminate the U.S. government’s longstanding authority to identify and rectify unintended discriminatory practices of entities that receive federal funding, affecting everything from housing and education to policing and environmental protection.

A final rule added to the Federal Register on Dec. 9 rescinds Title VI portions of the 1964 Civil Rights Act that “prohibit conduct having a disparate impact,” which government lawyers claim are unconstitutional and “do not sufficiently serve the public interest.”

“For decades, the Justice Department has used disparate-impact liability to undermine the constitutional principle that all Americans must be treated equally under the law,” said Bondi in a press release announcing the final rule. “No longer.”

The rescissions come at the behest of President Donald Trump, who issued an executive order in April stating, “It is the policy of the United States to eliminate the use of disparate-impact liability in all contexts to the maximum degree possible.”

“Our rejection of this theory will restore true equality under the law by requiring proof of actual discrimination, rather than enforcing race- or sex-based quotas or assumptions,” added Harmeet Dhillon, head of the DOJ’s Civil Rights Division, in the press release.

But more than 200 former employees of the Civil Rights Division who have left the DOJ this year excoriated the move in an open letter released Tuesday.

“America deserves better,” the former employees wrote. They accused department leadership of “largely abandoning its duty to protect civil rights” and launching “a coordinated effort to drive us out.”

They also accuse Dhillon, specifically, of implementing a new mission statement for the division that includes “dropping any mention of the Fair Housing Act.”

Disparate impact background

The Department of Housing and Urban Development (HUD) administers the Fair Housing Act, landmark housing legislation passed in 1968 that, among other goals, prohibits housing discrimination.

Disparate impact discrimination refers to a seemingly neutral policy or action that results in disproportionate and unjustified negative harm to a group, regardless of intent.

Paul Hancock, an attorney and partner at K&L Gates, previously served in senior roles in the DOJ’s Civil Rights Division, including nine years as chief of the housing and civil enforcement section. He told Scotsman Guide that “there’s always been a debate about whether disparate impact applies under Title VI of the Civil Rights Act because of the original focus on intentional discrimination.”

The DOJ’s new rule entails that recipients of federal funds can only be held accountable for discriminatory acts that can be proven to be intentional, despite the Supreme Court affirming the constitutionality of disparate impact liability under the Fair Housing Act in a 5-4 decision in 2015.

Tuesday’s actions by the DOJ reflect ongoing efforts by the Trump administration to deconstruct fair lending enforcement, from gutting departments tasked with monitoring compliance with fair lending laws in the public and private sectors to narrowing the scope of fair lending laws on the books.

The anti-disparate impact rule was added to the Federal Register by the DOJ without the typical public notice and comment opportunity — a similar tactic as that of HUD when it submitted a rule to the White House Office of Management and Budget for review in September to roll back the housing agency’s 2023 Disparate Impact Rule.

In response to Scotsman Guide’s question as to why the department refrained from holding a public comment period, a DOJ spokesperson cited clauses in the Administrative Procedures Act allowing agencies to skip that process for rules “relating to agency management or personnel or to public property, loans, grants, benefits, or contracts.”

HUD did not respond to Scotsman Guide’s request for comment. A spokesperson for HUD told Scotsman Guide in November that “fair housing enforcement is prioritizing real instances of intentional discrimination, ending Biden’s politicization of fair housing law.”

Renewed focus on intent

In a press release, the president and CEO of the National Housing Conference, David M. Dworkin, called the administration’s new stance on disparate impact “the legal equivalent of ‘don’t ask, don’t tell,’” referring to a policy enacted in 1994 that prohibited openly non-heterosexual individuals from serving in the military. The policy was repealed in 2011.

“Rolling back disparate impact tools does not end discrimination — it obscures it,” said Dworkin. “Americans deserve civil rights enforcement based on what people experience, and that can only be measured under disparate impact.”

The National Fair Housing Alliance also derided the new rule as the Trump administration’s “latest attack on a key civil rights protection” in a statement shared with Scotsman Guide.

“Robust Title VI enforcement ensures that everyone benefits from key government programs that too often bypass some in need,” said Nikitra Bailey, executive vice president of the NFHA. “Without disparate impact, it will be immeasurably harder to address such unjust results and remove arbitrary and unnecessary barriers to fairness.”

Glenn Roper, senior attorney at the Pacific Legal Foundation, a public interest legal organization that advocates for limited government, called the DOJ rule “an important course of correction — one that restores fidelity to the law Congress actually enacted.”

“It ensures that in housing, lending, and other federally funded areas, enforcement will focus on real discriminatory actors rather than punishing compliant institutions based on dubious statistical models,” Roper continued. “I’m hopeful the courts will uphold this long-overdue return to the Civil Rights Act’s core principle.”

The Civil Rights Act prohibits discrimination based on an individual’s race, color, religion, sex or national origin, originally ensuring equal treatment under the law by focusing enforcement on instances of intentional discrimination.

Since 1973, the DOJ has required recipients of federal funds to consider disparate impacts of their policies and practices that may produce discriminatory effects disproportionately harming particular demographics.

Fairness, the DOJ and the Trump administration say, has been corrupted by disparate impact.

“For over 50 years, the prior disparate-impact rule fostered the very thing the Civil Rights Act of 1964 prohibited — discrimination on the basis of race, color, or national origin,” Nicholas Schilling, supervisory official for the Office of Legal Policy at the DOJ, stated in a press release.

Daniella Casseres, partner and head of the mortgage regulatory practice group at financial services law firm Mitchell Sandler, assessed the impact the DOJ move may have on the mortgage industry.

“To the extent this requires well supported proof of intentional discrimination, this change represents a win for many lenders that have had to defend investigations that drag on for years based on little more than inferences based on statistical data,” Casseres told Scotsman Guide. “In some geographies, I work with lenders that cannot move statistics much in their favor despite best efforts.”