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Feds propose restoring rules that could affect Oyster Bay housing discrimination case

The U.S. Justice Department sued Oyster Bay in

The U.S. Justice Department sued Oyster Bay in 2014, alleging its Golden Age housing program for seniors and Next Generation housing program for first-time home buyers were discriminatory because they give a preference to town residents. Credit: Anthony Lanzilote

The U.S. Department of Housing and Urban Development has proposed reinstating 2013 rules for the enforcement of the Fair Housing Act regarding discriminatory effects at issue in a lawsuit brought against Oyster Bay.

"We must acknowledge that discrimination in housing continues today and that individuals, including people of color and those with disabilities, continue to be denied equal access to rental housing and homeownership," HUD Secretary Marcia Fudge said in a June news release. "It is a new day at HUD — and our Department is working to lift barriers to housing and promote diverse, inclusive communities across the country."

HUD, the federal agency authorized to administer and enforce the act, changed its rules in 2020 to make it more difficult to pursue cases alleging disparate impact discrimination. Such discrimination is a legal standard that holds that a practice can violate the Fair Housing Act if its effect is to discriminate against a protected class — race, color, religion, sex, disability, familial status or national origin — regardless of the intent of the practice.

Under then-President Barack Obama, HUD created rules that codified an existing legal framework in disparate impact cases so that if a plaintiff proved a practice caused or would predictably cause discrimination, then the defendant would need to prove the practice "is necessary to achieve one or more substantial, legitimate, nondiscriminatory interests." Even if the defendant proved the practice had nondiscriminatory interests, it could still lose if the plaintiff could prove those goals could be achieved through a less discriminatory practice.

A 2015 U.S. Supreme Court decision upheld the disparate impact standard.

Last year, as then-President Donald Trump’s term neared its end, HUD published new rules that made it more difficult to pursue disparate impact cases, but those rules never went into effect because the U.S. District Court for the District of Massachusetts issued a preliminary injunction, ruling that they appeared "to make it easier for offending defendants to dodge liability and more difficult for plaintiffs to succeed."

The U.S. Justice Department sued Oyster Bay in 2014, alleging its Golden Age housing program for seniors and Next Generation housing program for first-time homebuyers were discriminatory because they give a preference to town residents for the below market rate co-ops. The Justice Department alleges that the preference is discriminatory because Oyster Bay is predominantly white and has a lower percentage of Blacks compared with New York City and Nassau and Suffolk counties.

Oyster Bay has denied the allegations. Oyster Bay’s outside attorney, Brian Sokoloff of Carle Place-based Sokoloff Stern LLP, did not return a request for comment Monday.

In a 2017 discussion before the Oyster Bay Town Board over attorney’s bills in the case, then-Town Attorney Joseph Nocella said the town seemed to have been "selected as a whipping boy by the Obama Justice Department."

Settlement discussions between the U.S. Attorney’s office and Oyster Bay broke down late last year.

On Jan. 26, President Joseph Biden ordered HUD to reexamine the 2020 rule, and last month HUD announced it intended to reverse it and published a new rule to do so.

"The 2013 Rule sets a more appropriately balanced standard for pleading, proving, and defending a fair housing case alleging a policy or practice has a discriminatory effect," HUD said in its proposed new rule, which is subject to public comment until Aug. 24.

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