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The Disparate Impact Is Nigh


A racial agenda is about to be unleashed on America. According to Investor’s Business Daily (Nov. 8), the Obama administration intends to eliminate the “persistent gaps” between whites and minorities “in everything from credit scores and homeownership to test scores and graduation rates.”

Almost every organization and business in America could be held legally accountable for policies that negatively impact one race more than another. It does not matter if the organization or business applies its policies neutrally; what matters is the impact.

The president of the Center for Equal Opportunity, Robert Clegg, stated (Nov. 5) that Obama is “aggressively pushing the ‘disparate impact’ approach to civil-rights enforcement.” As Clegg pointed out,

The federal government insists that the numbers come out right, even if it means that policemen and firefighters cannot be tested, students cannot be disciplined, that companies will hire criminals, that loans are made to the uncreditworthy, and that — I kid you not — whether pollution is acceptable depends on whether dangerous chemicals are spread about in a racially balanced way.

Most people will not see the radical agenda coming because of its method of delivery.

Two means that fly under the radar

The Obama administration is expert at imposing de facto laws without going through Congress. One of the means it has to do so is through regulatory agencies that draw little to no congressional oversight or attention from the media. The agencies simply and quietly enforce administrative policies that have the effect of law. For example, instead of outlawing the production of natural gas, various agencies are working to impose such stringent safety, environmental, and other requirements that natural-gas companies will no longer be able to function productively. In effect, this constitutes a ban.

Human Events (Nov. 7) reported,

Today the Obama administration — through no less than fourteen federal agencies, including the EPA, the Department of Energy (DOE), the Bureau of Land Management (BLM), the Center for Disease Control (CDC), the Department of Agriculture (USDA), and the Securities and Exchange Commission (SEC) — is working to find ways to regulate hydraulic fracturing at the federal level, so that they can limit and eventually stop the practice altogether.

This use of regulations to impose political agendas is unbridled. In an article entitled “6,125 Proposed Regulations and Notifications Posted in Last 90 Days — Average 68 per Day,” CNS News (Nov. 9) commented, “It’s Friday morning, and so far today, the Obama administration has posted 165 new regulations and notifications on its regulations.gov website.”

Another means the Obama administration has to wield the force of law without consulting Congress is through lawsuits brought by the Department of Justice (DOJ), especially by the Civil Rights Division. The DOJ has broad discretion in choosing the cases it wishes to pursue. Under Obama, the agency has been excoriated for choosing only those cases that accord with the president’s political and social vision.

Christopher Coates, former voting chief for the department’s Civil Rights Division, has accused the DOJ of ignoring cases that involve white victims and black defendants. The comment came as a result of the DOJ’s abandonment of a well-documented case of 2008 voter intimidation in Philadelphia by the Black Panthers. On the other hand, the DOJ has vigorously prosecuted 80-year-old Richard Retta, an anti-abortion zealot who often protests outside a Planned Parenthood facility near the White House.

The activity of the DOJ has expanded dramatically under Obama. J. Christian Adams, former attorney for the Voting Rights Section of the Civil Rights Division of the Department of Justice, authored a book entitled Injustice: Exposing the Racial Agenda of the Obama Justice Department. According to Adams, the Obama DOJ imposes a political agenda even if it means ignoring existing law.

We now face the Orwellian situation where government lawyers brazenly ignore and subvert the law they have sworn to uphold, and where a leading civil rights protection agency discriminates against some racial groups while it favors others. This is not only lawlessness, it is the most dangerous kind of lawlessness — for history shows that once a nation’s laws cease to apply to the law enforcers, individual liberty does not survive for very long.

The disparate-impact juggernaut

Both the regulatory agencies and the DOJ seem ready to impose a broad interpretation of the Civil Rights Act (CRA) of 1964. The CRA banned discrimination based on race, religion, gender, nationality, and ethnic background from practices of the federal and state governments as well as some public services. The act has been augmented several times since then through further legislation and judicial precedent.

Recently, the DOJ has vigorously pushed the idea of “disparate impact” as a form of discrimination. Under the doctrine of disparate impact, an employer who uses an apparently neutral approach to hiring can still be found legally liable for discrimination if the hiring practice is discriminatory in its effect. An example would be a university physics department that applies the same hiring standards to all applicants and yet ends up with a department that is 90% male or 90% white. The hiring practice may be neutral in intent and application but, nevertheless, it would be said to “discriminate” against women or minorities in its effect. Numerical outcomes become the litmus test of whether a practice is a violation of civil rights.

A prominent example of the DOJ’s pursuit of the disparate-impact policy is the series of lawsuits it has brought against banks. Investor’s Business Daily (Aug. 16) reported, “For the past three years, the Justice Department has filed a series of bruising lawsuits against U.S. lenders for race discrimination while hiding behind opaque investigative methods and hoping banks don’t challenge the cases in court.” Instead of using complaints from victims to trigger lawsuits, the DOJ has been using statistical models. The DOJ filed 55 race-bias claims against banks from 2009 to 2011; only 30 claims were filed in all of the previous 8 years.

IBD commented further,

Wells Fargo … and Bank of America … agreed to pay record sums and adopt minority-friendly lending policies in court orders acknowledging “no factual finding” of prejudice.

[Attorney General] Holder’s increasingly aggressive prosecutors have managed to wring more than $550 million in payouts from bank defendants, not including the costs, in some cases, of having to open branches in depressed urban areas.

Thus, Holder’s “witch hunt” not only imposes social or racial engineering on banks, it also serves as a cash cow for the federal government.

Regulatory agencies also play an important role in pushing the disparate-impact agenda. On June 8, the Washington Legal Foundation (WLF) reported on a proposal by the U.S. Department of Housing and Urban Development (HUD).

The proposal would impose liability for policies and practices that although benign in purpose, impact minority and nonminority persons or residential areas differently. It endorses a “disparate-impact” theory, which allows plaintiffs to bring Fair Housing Act claims without any evidence of discriminatory intent.

This also “would increase the legal risk of housing providers, lenders, and providers of housing-related services” by requiring companies to prove the business necessity of practices that result in disparate impact. In short, “HUD’s proposal allows the government and private plaintiffs to second guess business decisions.”

Property-insurance providers could be particularly impacted. (The federal courts have sided with HUD on interpreting the Fair Housing Act as covering the practices of these providers.) The proposed rule explicitly names “the provision and pricing of homeowner’s insurance” as an instance “of a housing policy or practice that may have a disparate impact on a class of persons delineated by characteristics protected by the Act.” This means property-insurance providers will be vulnerable to a dramatic increase in unlawful discrimination claims against them. The resulting expense of legal proceedings and the threat of compensatory or punitive awards would drive up the cost of insurance and change practices within the industry.

As it stands, HUD’s proposal is likely to be decided by a current case being indirectly handled by the United States Supreme Court: Mount Holly v. Mount Holly Gardens Citizens in Action, Inc. Although the court has not agreed to hear the case itself, on October 29 it invited the solicitor general to file a brief expressing the “views of the United States” on whether “disparate impact claims are cognizable under the Fair Housing Act” and, if so, which tests of discrimination are appropriate.

Through regulation and judicial precedent, HUD is attempting to impose disparate-impact policies on one of the largest industries in America — housing. And remember, this is only one of many regulatory agencies attempting to slap down the free market.


While on the presidential campaign trail, Obama rarely mentioned race, even though the DOJ and the various regulatory agencies were active in the background. He now has immense power for the next four years. He is also free from the constraint of worrying about how his policies might affect his re-election. America is about to enter a racially charged period in which it is dangerous for organizations and businesses to do anything other than give a defensive preference to minorities.


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    Wendy McElroy is an author for The Future of Freedom Foundation, a fellow of the Independent Institute, and the author of The Reasonable Woman: A Guide to Intellectual Survival (Prometheus Books, 1998).