81 FR 63054 - Quid Pro Quo and Hostile Environment Harassment and Liability for Discriminatory Housing Practices Under the Fair Housing Act
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Federal Register Volume 81, Issue 178 (September 14, 2016)
Federal Register Volume 81, Issue 178 (September 14, 2016)
| Page Range | 63054-63075 | |
| FR Document | 2016-21868 |
[Federal Register Volume 81, Number 178 (Wednesday, September 14, 2016)] [Rules and Regulations] [Pages 63054-63075] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-21868] ======================================================================= ----------------------------------------------------------------------- DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 24 CFR Part 100 [Docket No. FR-5248-F-02] RIN 2529-AA94 Quid Pro Quo and Hostile Environment Harassment and Liability for Discriminatory Housing Practices Under the Fair Housing Act AGENCY: Office of the Assistant Secretary for Fair Housing and Equal Opportunity, HUD. ACTION: Final rule. ----------------------------------------------------------------------- SUMMARY: This final rule amends HUD's fair housing regulations to formalize standards for use in investigations and adjudications involving allegations of harassment on the basis of race, color, religion, national origin, sex, familial status, or disability. The rule specifies how HUD will evaluate complaints of quid pro quo (``this for that'') harassment and hostile environment harassment under the Fair Housing Act. It will also provide for uniform treatment of Fair Housing Act claims raising allegations of quid pro quo and hostile environment harassment in judicial and administrative forums. This rule defines ``quid pro quo'' and ``hostile environment harassment,'' as prohibited under the Fair Housing Act, and provides illustrations of discriminatory housing practices that constitute such harassment. In addition, this rule clarifies the operation of traditional principles of direct and vicarious liability in the Fair Housing Act context. DATES: Effective date: October 14, 2016. FOR FURTHER INFORMATION CONTACT: Lynn Grosso, Acting Deputy Assistant Secretary for Enforcement and Programs, Office of Fair Housing and Equal Opportunity, Department of Housing and Urban Development, 451 7th Street SW., Room 5204, Washington DC 20410-2000; telephone number 202- 402-5361 (this is not a toll-free number). Persons with hearing or speech impairments may contact this number via TTY by calling the toll- free Federal Relay Service at 800-877-8339. SUPPLEMENTARY INFORMATION: I. Executive Summary A. Purpose of the Regulatory Action Both HUD and the courts have long recognized that Title VIII of the Civil Rights Act of 1968, as amended, (42 U.S.C. 3601 et seq.) (Fair Housing Act or Act) prohibits harassment in housing and housing-related transactions because of race, color, religion, sex, national origin, disability,\1\ and familial status, just as Title VII of the Civil Rights Act of 1964 (42 U.S.C. 2000e et seq.) (Title VII) prohibits such harassment in employment. But no standards had been formalized for assessing claims of harassment under the Fair Housing Act. Courts have often applied standards first adopted under Title VII to evaluate claims of harassment under the Fair Housing Act, but there are differences between the Fair Housing Act and Title VII, and between harassment in the workplace and harassment in or around one's home, that warrant this rulemaking. --------------------------------------------------------------------------- \1\ This rule uses the term ``disability'' to refer to what the Fair Housing Act and its implementing regulations refer to as ``handicap.'' Both terms have the same legal meaning. See Bragdon v. Abbott, 524 U.S. 624, 631 (1998). --------------------------------------------------------------------------- This rule formalizes standards for evaluating claims of quid pro quo and hostile environment harassment in the housing context. The rule does so by defining ``quid pro quo harassment'' and ``hostile environment harassment'' as conduct prohibited under the Fair Housing Act, and by specifying the standards to be used to evaluate whether particular conduct creates a quid pro quo or hostile environment in violation of the Act. Such standards will apply both in administrative adjudications and in cases brought in federal and state courts under the Fair Housing Act. This rule also adds to HUD's existing Fair Housing Act regulations illustrations of discriminatory housing practices that may constitute illegal quid pro quo and hostile environment harassment. By establishing consistent standards for evaluating claims of quid pro quo and hostile environment harassment, this rule provides guidance to providers of housing or housing-related services seeking to ensure that their properties or businesses are free of unlawful harassment. The rule also provides clarity to victims of harassment and their representatives regarding how to assess potential claims of illegal harassment under the Fair Housing Act. In addition, this final rule clarifies when housing providers and other entities or individuals covered by the Fair Housing Act may be held directly or vicariously liable under the Act for [[Page 63055]] illegal harassment, as well as for other discriminatory housing practices that violate the Act. This rule sets forth how these traditional liability standards apply in the housing context because, in HUD's experience, there has been significant misunderstanding among public and private housing providers as to the circumstances under which they will be subject to liability under the Fair Housing Act for discriminatory housing practices undertaken by others. B. Legal Authority for the Regulation The legal authority for this regulation is found in the Fair Housing Act, which gives the Secretary of HUD the ``authority and responsibility for administering this Act.'' 42 U.S.C. 3608(a). In addition, the Act provides that ``[t]he Secretary may make rules (including rules for the collection, maintenance, and analysis of appropriate data) to carry out this title. The Secretary shall give public notice and opportunity for comment with respect to all rules made under this section.'' 42 U.S.C. 3614a. HUD also has general rulemaking authority under the Department of Housing and Urban Development Act to make such rules and regulations as may be necessary to carry out its functions, powers and duties. See 42 U.S.C. 3535(d). C. Summary of Major Provisions The major provisions of this rule:Formalize definitions of ``quid pro quo harassment'' and ``hostile environment harassment'' under the Fair Housing Act. Formalize standards for evaluating claims of quid pro quo and hostile environment harassment under the Fair Housing Act. Add illustrations of prohibited quid pro quo and hostile environment harassment to HUD's existing Fair Housing Act regulations. Identify traditional principles of direct and vicarious liability applicable to all discriminatory housing practices under the Fair Housing Act, including quid pro quo and hostile environment harassment. Please refer to section III of this preamble, entitled ``This Final Rule,'' for a discussion of the changes made to HUD's regulations by this final rule. D. Costs and Benefits This rule formalizes clear, consistent, nationwide standards for evaluating harassment claims under the Fair Housing Act. The rule does not create any new forms of liability under the Fair Housing Act and thus adds no additional costs for housing providers and others engaged in housing transactions. The benefits of the rule are that it will assist in ensuring compliance with the Fair Housing Act by defining quid pro quo and hostile environment harassment that violates the Act and by specifying traditional principles of direct and vicarious liability, consistent with Supreme Court precedent. Articulating clear standards enables entities subject to the Fair Housing Act's prohibitions and persons protected by its terms to understand the types of conduct that constitute actionable quid pro quo and hostile environment harassment. As a result, HUD expects this rule to facilitate more effective training to avoid discriminatory harassment in housing and decrease the need for protracted litigation to resolve disputed claims. II. Background Title VIII of the Civil Rights Act of 1968, as amended (the Fair Housing Act or Act), prohibits discrimination in the availability and enjoyment of housing and housing-related services, facilities, and transactions because of race, color, national origin, religion, sex, disability, and familial status. 42 U.S.C. 3601-19. The Act prohibits a wide range of discriminatory housing and housing-related practices, including, among other things, making discriminatory statements, refusing to rent or sell, denying access to services, setting different terms or conditions, refusing to make reasonable modifications or accommodations, discriminating in residential real estate-related transactions, and retaliating. See 42 U.S.C. 3604, 3605, 3606 and 3617. In 1989, HUD promulgated fair housing regulations at 24 CFR part 100 that address discriminatory conduct in housing generally. The 1989 regulations include examples of discriminatory housing practices that cover quid pro quo sexual harassment and hostile environment harassment generally. Section 100.65(b)(5) identifies, as an example of unlawful conduct, denying or limiting housing-related services or facilities because a person refused to provide sexual favors. Section 100.400(c)(2) offers as an example of illegal conduct ``. . . interfering with persons in their enjoyment of a dwelling because of race, color, religion, sex, handicap, familial status, or national origin of such persons, or of visitors or associates of such persons.'' The 1989 regulations do not, however, expressly define quid pro quo or hostile environment harassment, specify standards for examining such claims, or provide illustrations of other types of quid pro quo or hostile environment harassment prohibited by the Act. The 1989 regulations also do not discuss liability standards for prohibited harassment or other discriminatory housing practices. Over time, forms of harassment that violate civil rights laws have coalesced into two legal doctrines--quid pro quo and hostile environment. Although HUD and the courts have recognized that the Fair Housing Act prohibits harassment because of race or color,\2\ disability,\3\ religion,\4\ national origin,\5\ familial status,\6\ and sex,\7\ the doctrines of quid pro quo and hostile environment harassment are not well developed under the Fair Housing Act. --------------------------------------------------------------------------- \2\ See, e.g., Smith v. Mission Assoc. Ltd. P'ship, 225 F. Supp. 2d 1293, 1298-99 (D. Kan. 2002) (42 U.S.C. 3604(b)); HUD v. Tucker, 2002 ALJ LEXIS 33, *3-4 (HUD ALJ 2002) (42 U.S.C. 3604(a) and (b)). \3\ See, e.g., Neudecker v. Boisclair Corp., 351 F. 3d 361, 364 (8th Cir. 2003) (42 U.S.C. 3604(f)(2)). \4\ See, e.g., Bloch v. Frischholz, 587 F. 3d 771, 787 (7th Cir. 2009) (42 U.S.C. 3604(b), 3617). \5\ See, e.g., Effendi v. Amber Fields Homeowners Assoc., 2011 U.S. Dist. Lexis 35265, *1 (N.D. Ill. 2011) (42 U.S.C. 3604(b) and 3617); Texas v. Crest Asset Mgmt., 85 F. Supp. 722, 736 (S.D. TX 2000) (42 U.S.C. 3604(a) and (b), 3617). \6\ See, e.g., Bischoff v. Brittain, 2014 U.S. Dist. LEXIS 145945, *13-14, *17 (E.D. Cal. 2014) (3604(b)); United States v. M. Westland Co., 1995 U.S. Dist. LEXIS 22466, *4 (C.D. Cal. 1995) (Fair Housing Act provision not specified). \7\ See, e.g., Quigley v. Winter, 598 F. 3d 938, 946 (8th Cir. 2010) (42 U.S.C. 804(b), 3617); Krueger v. Cuomo, 115 F. 3d 487, 491 (7th Cir. 1997) (42 U.S.C. 3604(b), 3617); Honce v. Vigil, 1 F. 3d 1085, 1088 (10th Cir. 1993) (42 U.S.C. 3604(b)); Shellhammer v. Lewallen, 770 F. 2d 167 (6th Cir. 1985) (sexual harassment under the Fair Housing Act in general). --------------------------------------------------------------------------- As a result, when deciding harassment cases under the Fair Housing Act, courts have often looked to case law decided under Title VII, which prohibits employment discrimination because of race, color, religion, sex, and national origin.\8\ But the home and the workplace are significantly different environments such that strict reliance on Title VII case law is not always appropriate. One's home is a place of privacy, security, and refuge (or should be), and harassment that occurs in or around one's home can be far more intrusive, violative and threatening than harassment in the more public environment of one's work place.\9\ Consistent with this reality, the [[Page 63056]] Supreme Court has recognized that individuals have heightened expectations of privacy within the home.\10\ --------------------------------------------------------------------------- \8\ See, e.g., Honce v. Vigil, 1 F. 3d at 1088; Shellhammer v. Lewallen, 770 F. 2d 167; Glover v. Jones, 522 F. Supp. 2d 496, 503 (W.D.N.Y. 2007); Beliveau v. Caras, 873 F. Supp. 1393, 1396 (C.D. Cal. 1995); see also Neudecker v. Boisclair Corp., 351 F. 3d at 364 (applying Title VII concepts to find hostile environment based on disability violated Act). Unlike Title VII, the Act also includes disability and familial status among its protected characteristics. \9\ See, e.g., Quigley v. Winter, 598 F. 3d at 947 (emphasizing that defendant's harassing conduct was made ``even more egregious'' by the fact that it occurred in plaintiff's home, ``a place where [she] was entitled to feel safe and secure and need not flee.''); Salisbury v. Hickman, 974 F. Supp. 2d 1282, 1292 (E.D. Cal. 2013) (``[c]ourts have recognized that harassment in one's own home is particularly egregious and is a factor that must be considered in determining the seriousness of the alleged harassment''); Williams v. Poretsky Management, 955 F. Supp. 490, 498 (D. Md. 1996) (noting sexual harassment in the home more severe than in workplace); Beliveau v. Caras, 873 F. Supp. at 1398 (describing home as place where one should be safe and not vulnerable to sexual harassment); D. Benjamin Barros, Home As a Legal Concept, 46 Santa Clara L. Rev. 255, 277-82 (2006) (discussing legal concept of home as source of security, liberty and privacy which justifies favored legal status in many circumstances); Nicole A. Forkenbrock Lindemyer, Article, Sexual Harassment on the Second Shift: The Misfit Application of Title VII Employment Standards to Title VIII Housing Cases, 18 Law & Ineq. 351, 368-80 (2000) (noting that transporting of Title VII workplace standards for sexual harassment into Fair Housing Act cases of residential sexual harassment ignores important distinctions between the two settings); Michelle Adams, Knowing Your Place: Theorizing Sexual Harassment at Home, 40 Ariz. L. Rev. 17, 21-28 (1998) (describing destabilizing effect of sexual harassment in the home). \10\ See, e.g. Frisby v. Schultz, 487 U.S. 474, 484 (1988) (``[w]e have repeatedly held that individuals are not required to welcome unwanted speech into their own homes and that the government may protect this freedom''). --------------------------------------------------------------------------- This rule therefore formalizes standards to address harassment in and around one's home and identifies some of the differences between harassment in the home and harassment in the workplace. While Title VII and Fair Housing Act case law contain many similar concepts, this regulation describes the appropriate analytical framework for harassment claims under the Fair Housing Act. The rule addresses only quid pro quo and hostile environment harassment, and not conduct generically referred to as harassment that, for different reasons, may violate section 818 or other provisions of the Fair Housing Act. For example, a racially hostile statement by a housing provider could indicate a discriminatory preference in violation of section 804(c) of the Act, or it could evidence intent to deny housing or discriminate in the terms or conditions of housing in violation of sections 804(a) or 804(b), even if the statement does not create a hostile environment or establish a quid pro quo. Section 818, which makes it unlawful to ``coerce, intimidate, threaten, or interfere with any person in the exercise or enjoyment of'' rights protected by the Act, or on account of a person having aided others in exercising or enjoying rights protected by the Act, could be violated by conduct that creates a quid pro quo or hostile environment. It is not, however, limited to quid pro quo or hostile environment claims and could be violated by other conduct that constitutes retaliation or another form of coercion, intimidation, threats, or interference because of a protected characteristic. In sum, this rule provides standards that are uniformly applicable to claims of quid pro quo and hostile environment harassment under the Fair Housing Act, regardless of the section of the Act that is alleged to have been violated, and the same discriminatory conduct could violate more than one provision of the Act whether or not it also constitutes quid pro quo or hostile environment harassment. III. Changes Made at the Final Rule Stage A. Overview of Changes Made at the Final Rule Stage In response to public comment and upon further consideration by HUD of the issues presented in this rulemaking, HUD makes the following changes at this final rule stage: Re-words proposed Sec. 100.7(a)(1)(iii) to avoid confusing the substantive obligation to comply with the Fair Housing Act with the standard of liability for discriminatory third-party conduct. Proposed Sec. 100.7(a)(1)(iii) stated that a person is directly liable for ``failing to fulfill a duty to take prompt action to correct and end a discriminatory housing practice by a third-party, where the person knew or should have known of the discriminatory conduct. The duty to take prompt action to correct and end a discriminatory housing practice by a third-party derives from an obligation to the aggrieved person created by contract or lease (including bylaws or other rules of a homeowner's association, condominium or cooperative), or by federal, state or local law.'' Section 100.7(a)(1)(iii) of this final rule provides that a person is directly liable for ``failing to take prompt action to correct and end a discriminatory housing practice by a third-party, where the person knew or should have known of the discriminatory conduct and had the power to correct it. The power to take prompt action to correct a discriminatory housing practice by a third-party depends upon the extent of control or any other legal responsibility the person may have with respect to the conduct of such third-party.'' Adds to Sec. 100.400 a new paragraph (c)(6) specifying as an example of a discriminatory housing practice retaliation because a person reported a discriminatory housing practice, including quid pro quo or hostile environment harassment. Adds to Sec. 100.600(a)(2)(i), ``Totality of the circumstances,'' a new paragraph (C) that explains the reasonable person standard under which hostile environment harassment is assessed ``Whether unwelcome conduct is sufficiently severe or pervasive as to create a hostile environment is evaluated from the perspective of a reasonable person in the aggrieved person's position.'' Re-words proposed Sec. 100.600(a)(2)(i)(B) to clarify that proof of hostile environment would not require demonstrating psychological or physical harm to avoid any confusion on that point. Proposed Sec. 100.600(a)(2)(i)(B) stated ``Evidence of psychological or physical harm is relevant in determining whether a hostile environment was created, as well as the amount of damages to which an aggrieved person may be entitled. Neither psychological nor physical harm, however, must be demonstrated to prove that a hostile environment exists.'' Section 100.600(a)(2)(i)(B) in this final rule provides: ``Neither psychological nor physical harm must be demonstrated to prove that a hostile environment exists. Evidence of psychological or physical harm may, however, be relevant in determining whether a hostile environment existed and, if so, the amount of damages to which an aggrieved person may be entitled.'' Re-words proposed Sec. 100.600(c) to clarify that a single incident may constitute either quid pro quo or hostile environment harassment if the incident meets the standard for either type of harassment under Sec. 100.600(a)(1) or (a)(2). Proposed Sec. 100.600(c) provided ``A single incident of harassment because of race, color, religion, sex, familial status, national origin, or handicap may constitute a discriminatory housing practice, where the incident is severe, or evidences a quid pro quo.'' Section 100.600(c) in this final rule provides ``A single incident of harassment because of race, color, religion, sex, familial status, national origin, or handicap may constitute a discriminatory housing practice, where the incident is sufficiently severe to create a hostile environment, or evidences a quid pro quo.'' Corrects the illustration in proposed Sec. 100.65(b)(7) to fix a typographical error in the proposed rule. In the final rule, the word ``service'' is corrected and made plural. [[Page 63057]] IV. The Public Comments On October 21, 2015, at 80 FR 63720, HUD published for public comment a proposed rule on Quid Pro Quo and Hostile Environment Harassment and Liability for Discriminatory Housing Practices Under the Fair Housing Act. The public comment period closed on December 21, 2015. HUD received 63 comments. The comments were submitted by public housing agencies (PHAs) and other government agencies; private housing providers and their representatives; nonprofit organizations, including fair housing, civil rights, housing advocacy, and legal groups; tenants and other individuals. This section of the preamble addresses significant issues raised in the public comments and provides HUD's responses. All public comments can be viewed at: http://www.regulations.gov/#!docketDetail;D=HUD-2015-0095. The majority of the commenters were generally supportive of the rule, with some urging HUD to publish the rule quickly. This summary does not provide responses to comments that expressed support for the proposed rule without suggesting any modifications to the rule. General supportive comments included statements of the importance of the rule in addressing and preventing sexual assault of tenants by landlords and descriptions of how the rule would empower housing providers, renters, and other consumers to understand and avoid illegal housing practices by defining and illustrating quid pro quo and hostile environment harassment. Some commenters stated that this rule may help providers focus on the importance of eliminating harassment on their properties, and some commenters identified provisions of the rule that would provide useful guidance to housing providers, tenants, residents, and others involved in housing transactions. More specifically, commenters expressed appreciation that the rule would apply not solely to sexual harassment but to harassment because of all protected characteristics, with some commenters sharing anecdotes of harassment based on a variety of protected characteristics that they believe the rule may help remedy. Other commenters supported the proposed rule's distinction between the Fair Housing Act and Title VII, with commenters endorsing the Department's proposal not to adopt the Title VII affirmative defense to an employer's vicarious liability. A number of commenters assessed the rule to be in accord with case law, and approved of the balance the rule strikes between the rights and obligations of the parties in a fair housing matter. Some commenters noted that the proposed standard for determining whether conduct constitutes a hostile environment is appropriately individualized to the facts of each case. Some commenters specifically identified the benefits provided by the rule in establishing a uniform framework for fairly evaluating and appropriately responding to alleged harassment, which minimizes the subjective nature of adjudicating such claims. Other commenters expressed appreciation for the proposed rule's recognition that a single incident may establish hostile environment harassment. Some commenters expressed support for the rule's acknowledgement of the fear of retaliation many individuals with disabilities experience when trying to address issues of harassment in their housing. Many commenters stated that the rule's description of traditional principles of agency liability is accurate and not an expansion of existing liability. Some commenters expressed appreciation that the rule would incorporate traditional liability principles for any type of discriminatory housing practice, not just harassment, and would rely on negligence principles and distinguish between direct and vicarious liability. Other commenters stated that the rule would not burden housing providers because the direct liability standard is aligned with established housing provider business practice. Some commenters expressed appreciation that the rule would place landlords on notice that they should take corrective action early on, once they know or should have known of the discrimination. Several commenters stated that housing providers are already in possession of the tools they need to create living environments free from harassment. In particular, the commenters stated that housing providers are familiar with the corrective actions they may take in order to enforce their own rules. Another commenter stated that housing providers are in the best position to select, train, oversee, and assure the correct behavior of their agents, noting that effective enforcement of the rule depends on the potential for liability on the part of housing providers. Some commenters expressed support for the proposed rule while seeking modifications at the final rule stage. For example, a commenter encouraged broad application of the rule so that intervention and corrective action would occur before victims of housing discrimination are forced out of their homes. Another commenter sought an expansive reading of the rule in order to prevent all forms of bullying. Some commenters sought to add factors to the totality of circumstances consideration, while other commenters sought to add to the classes protected by the rule. Following are HUD's responses to commenters' suggested modifications to the rule and the other significant issues raised in the public comments. A. Quid Pro Quo and Hostile Environment Harassment: Sec. 100.600 a. General: Sec. 100.600(a) Issue: A commenter requested that HUD add seniors as a protected class under the rule. Other commenters stated that elderly persons often have disabilities, which make them particularly vulnerable to harassment. These commenters requested that the final rule make clear that the rule protects elderly persons from harassment because of disability. HUD Response: HUD shares the commenters' concern for elderly persons but does not have the authority to add a new protected class to the Fair Housing Act and therefore is unable to adopt the commenters' recommendation to expand the scope of the rule in this way. Neither age nor senior status is a protected characteristic under the Act, although persons who are discriminated against because of their disabilities are protected under the Act without regard to their age. Therefore, elderly individuals who are subjected to quid pro quo or hostile environment harassment on the basis of disability or another protected characteristic are protected under the Act and this final rule. Issue: A commenter suggested that HUD include a clause in the final rule to protect whistleblowers who experience harassment for reporting quid pro quo or hostile environment harassment. The commenter reported having witnessed such harassment and explained that whistleblowers are particularly vulnerable to quid pro quo and hostile environment harassment, but because they are not harassed on the basis of their race, color, religion, national origin, sex, familial status, or disability, they are not directly protected by the proposed regulation. HUD Response: Anyone who is harassed for reporting discriminatory harassment in housing is protected by the Fair Housing Act. Section 818 of the Act makes it unlawful to coerce, intimidate, threaten, or interfere with a person on account of his or her having [[Page 63058]] aided or encouraged another person in the exercise or enjoyment of any right granted or protected by sections 803-806 of the Act. To highlight the essential role whistleblower protection plays in ensuring fair housing, HUD is adding to Sec. 100.400 a new paragraph (c)(6), which provides the following example of a discriminatory housing practice ``Retaliating against any person because that person reported a discriminatory housing practice to a housing provider or other authority.'' Issue: Several commenters urged HUD to state in the final rule that harassment against persons who are lesbian, gay, bisexual, or transgender (LGBT), or because of pregnancy, violates the Fair Housing Act. They asked HUD to define harassment because of sex to include harassment based on sexual orientation, gender identity, sex stereotyping, or pregnancy. The commenters referenced studies about the pervasive harassment and discrimination such persons face in housing. They also noted that a number of federal courts and federal agencies have interpreted Title VII and other laws prohibiting discrimination because of sex to include discrimination on the basis of gender identity, gender transition, or transgender status. The commenters also pointed to HUD's ``Equal Access to Housing in HUD Programs Regardless of Sexual Orientation or Gender Identity'' rule, which provides that persons may not be denied access to HUD programs because of sexual orientation or gender identity. HUD Response: The Fair Housing Act already expressly prohibits discrimination based on pregnancy as part of its prohibition of discrimination because of familial status (42 U.S.C. 3602(k)), and HUD's Equal Access Rule applies only to HUD programs. HUD agrees with the commenters' view that the Fair Housing Act's prohibition on sex discrimination prohibits discrimination because of gender identity. In Price Waterhouse v. Hopkins, the Supreme Court interpreted Title VII's prohibition of sex discrimination to encompass discrimination based on non-conformance with sex stereotypes, stating that ``[i]n forbidding employers to discriminate against individuals because of their sex, Congress intended to strike at the entire spectrum of disparate treatment of men and women resulting from sex stereotypes.'' \11\ Taking note of Price Waterhouse and its progeny, in 2010, HUD issued a memorandum recognizing that sex discrimination prohibited by the Fair Housing Act includes discrimination because of gender identity. In 2012, the Equal Employment Opportunity Commission (EEOC) reached the same conclusion, ``clarifying that claims of discrimination based on transgender status, also referred to as claims of discrimination based on gender identity, are cognizable under Title VII's sex discrimination prohibition.'' \12\ Following the EEOC's decision, the Attorney General also concluded that: --------------------------------------------------------------------------- \11\ 490 U.S. 228, 251 (1989). \12\ Macy v. Dept. of Justice, No. 0120120821, 2012 EEOPUB LEXIS 1181, *13 (EEOC Apr. 20, 2012); see also Lusardi v. Dept. of the Army, No. 0120133395, 2015 EEOPUB LEXIS 896, *17 (EEOC Apr. 1, 2015). the best reading of Title VII's prohibition of sex discrimination is that it encompasses discrimination based on gender identity, including transgender status. The most straightforward reading of Title VII is that discrimination ``because of . . . sex'' includes discrimination because an employee's gender identification is as a member of a particular sex, or because the employee is transitioning, or has transitioned, to another sex.\13\ --------------------------------------------------------------------------- \13\ Attorney General Memorandum, Treatment of Transgender Employment Discrimination Claims Under Title VII of the Civil Rights Act of 1964 (Dec. 15, 2014), posted at http://www.justice.gov/file/188671/download. Similarly, the Office of Personnel Management revised its nondiscrimination regulations to make clear that sex discrimination under Title VII includes discrimination based on gender identity. See 5 CFR 300.102-300.103; see also OFCCP Directive 2014-02, Gender Identity and Sex Discrimination (Aug. 19, 2014) (stating that discrimination based on gender identity or transgender status is discrimination based on sex), posted at http://www.dol.gov/ofccp/regs/compliance/directives/Directive_2014-02_508c.pdf. HUD reaffirms its view that under the Fair Housing Act, discrimination based on gender identity is sex discrimination. Accordingly, quid pro quo or hostile environment harassment in housing because of a person's gender identity is indistinguishable from harassment because of sex.\14\ --------------------------------------------------------------------------- \14\ See Glenn v. Brumby, 663 F.3d at 1317 (``discrimination against a transgender individual because of her gender nonconformity is sex discrimination, whether it is described as being on the basis of sex or gender.''); see also Finkle v. Howard Cnty, 12 F. Supp. 3d 780, 788 (D. Md. 2014) (holding that ``Plaintiff's claim that she was discriminated against `because of her obvious transgender[] status is a cognizable claim of sex discrimination under Title VII''); Rumble v. Fairview Health Services, No. 14-cv-2037, 2015 U.S. Dist. LEXIS 31591, *4-5 (D. Minn. Mar. 16, 2015) (in Affordable Care Act case, holding that ``[b]ecause the term `transgender' describes people whose gender expression differs from their assigned sex at birth, discrimination based on an individual's transgender status constitutes discrimination based on gender stereotyping. Therefore, Plaintiff's transgender status is necessarily part of his `sex' or `gender' identity''). --------------------------------------------------------------------------- HUD, in its 2010 memorandum, also advised that claims of housing discrimination because of sexual orientation can be investigated under the Price Waterhouse sex-stereotyping theory. Over the past two decades, an increasing number of Federal courts, building on the Price Waterhouse rationale, have found protections under Title VII for those asserting discrimination claims related to their sexual orientation.\15\ Many Federal-sector EEOC decisions have found the same.\16\ Although some Federal [[Page 63059]] appellate courts have declined to find sex discrimination under Title VII based on the sole fact of the person's sexual orientation, those courts nonetheless recognized the Price Waterhouse sex-stereotyping theory may be used to find discrimination based on sex.\17\ These Title VII legal authorities are consistent with HUD's 2010 memorandum, in which HUD interprets the Fair Housing Act's prohibition on sex discrimination to include, at a minimum, discrimination related to an individual's sexual orientation where the evidence establishes that the discrimination is based on sex stereotypes. HUD's interpretation of sex discrimination under the Fair Housing Act is also consistent with the Department of Health and Human Services' rule interpreting sex discrimination under Section 1557 the Affordable Care Act \18\ and the Department of Labor's rule interpreting sex discrimination under Title VII of the Civil Rights Act of 1964.\19\ --------------------------------------------------------------------------- \15\ See, e.g., Prowel v. Wise Bus. Forms, Inc., 579 F.3d 285, 291-92 (3rd Cir. 2009) (harassment of a plaintiff because of his ``effeminate traits'' and behaviors could constitute sufficient evidence that he ``was harassed because he did not conform to [the employer's] vision of how a man should look, speak, and act--rather than harassment based solely on his sexual orientation''); Nichols v. Azteca Rest. Enter., Inc., 256 F.3d 864, 874-75 (9th Cir. 2001) (coworkers' and supervisors' harassment of a gay male because he did not conform to gender norms created a hostile work environment in violation of Title VII); Hall v. BNSF Ry. Co., No. C13-2160 RSM, 2014 U.S. Dist. LEXIS 132878 *8-9 (W.D. Wash. September 22, 2014) (plaintiff's allegation that ``he (as a male who married a male) was treated differently in comparison to his female coworkers who also married males'' stated a sex discrimination claim under Title VII); Terveer v. Billington, 34 F. Supp. 3d 100, 116 (D.D.C. 2014) (Title VII claim based on sex stated when plaintiff's ``orientation as homosexual'' removed him from the employer's preconceived definition of male); Heller v. Columbia Edgewater Country Club, 195 F. Supp. 2d 1212, 1224 (D. Or. 2002) (``[A] jury could find that Cagle repeatedly harassed (and ultimately discharged) Heller because Heller did not conform to Cagle's stereotype of how a woman ought to behave. Heller is attracted to and dates other women, whereas Cagle believes that a woman should be attracted to and date only men.''); Centola v. Potter, 183 F. Supp. 2d 403, 410 (D. Mass. 2002) (``Sexual orientation harassment is often, if not always, motivated by a desire to enforce heterosexually defined gender norms. In fact, stereotypes about homosexuality are directly related to our stereotype about the proper roles of men and women.''). Cf. Videckis v. Pepperdine Univ., 2015 U.S. Dist. LEXIS 167672, *16 (C.D. Cal. 2015) (``It is impossible to categorically separate `sexual orientation discrimination' from discrimination on the basis of sex or from gender stereotypes; to do so would result in a false choice. Simply put, to allege discrimination on the basis of sexuality is to state a Title IX claim on the basis of sex or gender.''). \16\ Baldwin v. Dep't of Transp., EEOC Appeal No. 0120133080, slip op. at 9-11 (July 16, 2015); Complainant v. Dep't of Homeland Sec., EEOC Appeal No. 0120110576, slip op. at 1 (Aug. 20, 2014) (``While Title VII's prohibition of discrimination does not explicitly include sexual orientation as a basis, Title VII prohibits sex discrimination, including sex-stereotyping discrimination and gender discrimination'' and ``sex discrimination claims may intersect with claims of sexual orientation discrimination.''); Couch v. Dep't of Energy, EEOC Appeal No. 0120131136, slip op. at 1 (Aug. 13, 2013) (finding harassment claim based on perceived sexual orientation is a discrimination claim based on failure to conform to gender stereotypes); Culp v. Dep't of Homeland Sec., EEOC Appeal 0720130012, slip op. at 1 (May 7, 2013) (Title VII covers discrimination based on associating with lesbian colleague); Castello v. U.S. Postal Serv., EEOC Appeal No. 0520110649, slip op. at 1 (Dec. 20, 2011) (vacating prior decision and holding that complainant stated claim of discrimination based on sex-stereotyping through evidence of offensive comments by manager about female subordinate's relationships with women); Veretto v. U.S. Postal Serv., EEOC Appeal No. 0120110873, slip op. at 1 (July 1, 2011) (court found that ``Complainant has alleged a plausible sex-stereotyping'' claim of harassment because he married a man). \17\ See, e.g., Gilbert v. Country Music Ass'n, 432 F. App'x 516, 520 (6th Cir. 2011) (acknowledging the validity of a sex- stereotyping claim ``based on gender non-conforming `behavior observed at work or affecting . . . job performance,' such as . . . `appearance or mannerisms on the job,' '' but rejecting the plaintiff's sex discrimination claim because his ``allegations involve discrimination based on sexual orientation, nothing more. He does not make a single allegation that anyone discriminated against him based on his `appearance or mannerisms' or for his `gender non- conformity.' '') (quoting Vickers v. Fairfield Med. Ctr., 453 F.3d 757, 763 (6th Cir. 2006); Pagan v. Gonzalez, 430 F. App'x 170, 171- 72 (3d Cir. 2011) (recognizing that ``discrimination based on a failure to conform to gender stereotypes is cognizable'' but affirming dismissal of the plaintiff's sex discrimination claim based on ``the absence of any evidence to show that the discrimination was based on Pagan's acting in a masculine manner''); Dawson v. Bumble & Bumble, 398 F.3d 211, 221, 222-23 (2d Cir. 2005) (observing that ``one can fail to conform to gender stereotypes in two ways: (1) Through behavior or (2) through appearance, but dismissing the plaintiff's sex discrimination claim because she ``has produced no substantial evidence from which we may plausibly infer that her alleged failure to conform her appearance to feminine stereotypes resulted in her suffering any adverse employment action''). See also Hively v. Ivy Tech Community College, 2016 U.S. App. LEXIS 13746, *16-25 (7th Cir. 2016) (reviewing this line of cases). \18\ Nondiscrimination in Health Programs and Activities, 81 FR 31376, 31388-90 (May 18, 2016) (to be codified at 45 CFR part 92). \19\ Discrimination Because of Sex, 81 FR 39108, 39137-40 (June 15, 2016) (to be codified at 41 CFR part 60-20). --------------------------------------------------------------------------- Issue: Some commenters asked HUD to provide a definition of harassment. A commenter noted that the proposed rule defines two types of harassment--quid pro quo and hostile environment, but does not define the general term ``harassment.'' Another commenter stated that if HUD believes that other types of harassment may also violate the Fair Housing Act, HUD should provide a definition of harassment. Other commenters strongly supported the rule's definitions of quid pro quo and hostile environment harassment, describing them as clear and inclusive, and stated that the definitions and related examples provided in the rule clarify what conduct the Fair Housing Act prohibits and will aid all stakeholders' understanding of the rule's provisions. HUD Response: The term harassment has broad colloquial usage with no defined parameters. For this reason, the final rule defines the specific terms ``quid pro quo'' and ``hostile environment harassment.'' Other conduct that might generically be referred to as harassment might fall in the categories of quid pro quo or hostile environment, or the conduct may constitute a different type of discriminatory housing practice in violation of section 818 of the Act or other provisions of the Act, or the conduct may not violate the Act at all. As the preamble to the proposed rule explained, a violation of section 818 may be established using the standards for quid pro quo or hostile environment harassment or by the specific elements of a section 818 violation, i.e., (1) the plaintiff or complainant exercised or enjoyed--or aided or encouraged another person in the exercise or enjoyment of--a right guaranteed by sections 803-06; (2) the defendant's or respondent's conduct constituted coercion, intimidation, a threat, or interference; and (3) a causal connection existed between the exercise, enjoyment, aid or encouragement of the right and the defendant's or respondent's conduct. Issue: Some commenters expressed concern that the proposed rule did not expressly state that sections 804(b) and 818 of the Fair Housing Act apply to discrimination that occurs after the complainant or plaintiff acquires the dwelling. The commenters stated that some courts have held that these provisions apply only to discrimination that affects access to housing and urged HUD to add language to the rule making clear that these particular provisions apply to post-acquisition discrimination claims. HUD Response: HUD believes that the definitions of ``quid pro quo'' and ``hostile environment harassment'' make clear HUD's view that the Act covers post-acquisition conduct and therefore no additional language is required. These definitions mirror the coverage of sections 804(b), 804(f)(2), and 818 of the Fair Housing Act, which plainly apply to both pre-acquisition and post-acquisition discrimination claims. Moreover, HUD has long interpreted and enforced these provisions of the Act and others to protect against discrimination that occurs before one acquires a dwelling as well as while one is living in the dwelling. HUD's 1989 regulations interpreting sections 804(b), 804(f)(2), and 818 of the Act, for example, provide that discrimination prohibited under these provisions includes the ``maintenance or repairs of sale or rental dwellings,'' ``[d]enying or limiting the use of privileges, services, or facilities associated with a dwelling,'' and threatening, intimidating or interfering with persons ``in their enjoyment of a dwelling.'' The inclusion of language covering the maintenance of housing, the continued use of privileges, services, or facilities associated with housing, and the ``exercise or enjoyment'' of housing indicates circumstances in which residents--as opposed to just applicants--benefit from the Act's protections throughout their residency. Sections 100.65(b)(6)-(7) of the proposed and of the final rule further illustrate some ways in which a person may violate sections 804(b), 804(f)(2), and 818 of the Fair Housing Act: ``conditioning the terms, conditions, or privileges relating to the sale or rental of a dwelling, or denying or limiting the services or facilities in connection therewith, on a person's response to harassment because of [a protected characteristic]; ``subjecting a person to harassment because of [a protected characteristic] that has the effect of imposing different terms, conditions, or privileges relating to the sale or rental of a dwelling or denying or limiting services or facilities in connection with the sale or rental of a dwelling.'' In sum, the Act and HUD's regulations, including this final rule, make clear that the Act prohibits discrimination that occurs while a person resides in a dwelling, and courts have repeatedly interpreted the Act similarly.\20\ --------------------------------------------------------------------------- \20\ See, e.g., Bloch v. Frischholz, 587 F.3d at779-81 (ruling that post-sale conduct by a homeowner's association could violate section 804(b) of the Act and allowing section 3604(b) claims to address post-acquisition conduct was consistent with HUD's regulations (citing 24 CFR 100.65(b)(4))); Comm. Concerning Cmty. Improvement v. City of Modesto, 583 F.3d 690, 713 (9th Cir. 2009) (concluding that the Act covers post-acquisition discrimination); Neudecker v. Boisclair Corp., 351 F.3d at 364 (finding plaintiff's post-acquisition harassment claim valid under the Act); DiCenso v. Cisneros, 96 F.3d 1004, 1008 (7th Cir. 1996) (recognizing claim for sexual harassment hostile housing environment under the Act); Honce v. Vigil, 1 F.3d at 1089-90 (recognizing that the Act prohibits both quid pro quo and hostile housing environment sexual harassment); Woods-Drake v. Lundy, 667 F.2d 1198, 1201 (5th Cir. 1982) (finding that a landlord's discriminatory conduct against current tenants violated section 3604(b) of the Act); Richards v. Bono, No. 5:04CV484-OC-10GRJ, 2005 WL 1065141, at *3 (M.D. Fla. May 2, 2005) (``[b]ecause the plain meaning of `rental' contemplates an ongoing relationship, the use of that term in Sec. 3604(b) means that the statute prohibits discrimination at any time during the landlord/ tenant relationship, including after the tenant takes possession of the property''); United States v. Koch, 352 F. Supp. 2d 970, 976 (D. Neb. 2004) (``[I]t is difficult to imagine a privilege that flows more naturally from the purchase or rental of a dwelling than the privilege of residing therein.''); U.S. Department of Housing and Urban Development, Office of Fair Housing and Equal Opportunity, Questions and Answers on Sexual Harassment under the Fair Housing Act (2008), available at http://portal.hud.gov/hudportal/documents/huddoc?id=QAndASexualHarassment.pdf (recognizing that current tenants may file fair housing complaints under the Act); Robert G. Schwemm, Fair Housing Litigation After Inclusive Communities: What's New and What's Not, 115 Colum. L. Rev. Sidebar 106, 122-23 (2015) (explaining that many post-acquisition actions, such as evictions and harassment, may give rise to violations under sections 804(a) and 804(b) of the Act). --------------------------------------------------------------------------- [[Page 63060]] Issue: Some commenters asked HUD to clarify how to distinguish potentially actionable harassment under the Fair Housing Act from protected speech under the First Amendment. A commenter said that it is not clear how conduct that allegedly constitutes harassment under the rule may be distinguished from other speech or conduct that is constitutionally protected or so trivial so as not to qualify as harassment in the first place. Another commenter said that courts have consistently held that the First Amendment protects a tenant who publicly speaks about a neighbor, even if that conduct is motivated by discriminatory intent. Another commenter asked whether the proposed rule would implicate constitutional protections of free speech or free exercise of religion if the housing provider evicts a tenant where, for example, two tenants are having heated religious arguments about the other's choice of religious attire. Another commenter stated that the proposed rule properly balanced the competing rights at issue and did not interfere with constitutionally protected speech because the rule would not encompass speech that is merely offensive or that causes nothing more than hurt feelings. HUD Response: As discussed elsewhere in this preamble, not every dispute between neighbors is a violation of the Fair Housing Act. Moreover, speech that is protected by the First Amendment is not within the Act's prohibitions. First Amendment protections do not extend to certain acts of coercion, intimidation, or threats of bodily harm proscribed by section 818 of the Act. As the Supreme Court has stated, ``true threats'' have no First Amendment protection.\21\ In Notice FHEO-2015-01, HUD has set out substantive and procedural guidelines regarding the filing and investigation of Fair Housing Act complaints that may implicate the First Amendment.\22\ The Notice discusses how HUD handles complaints against persons who are not otherwise covered by the Act, but who are alleged to have violated Section 818 of the Act. --------------------------------------------------------------------------- \21\ See, e.g., R.A.V. v. City of St. Paul, 505 U.S. 377, 388 (1992). \22\ Notice FHEO 2015-01 found at: http://portal.hud.gov/hudportal/documents/huddoc?id=5-26-2015notice.pdf. --------------------------------------------------------------------------- Issue: A commenter suggested that the rule is unnecessary because other administrative and legal remedies already exist for victims of harassment under state and local law. Another commenter suggested that the rule is unnecessary because HUD has already charged cases involving harassment under the Act. HUD Response: This final rule formalizes and provides uniform standards for evaluating complaints of quid pro quo and hostile environment harassment under the Fair Housing Act. While other administrative and legal causes of action may exist for victims of quid pro quo and hostile environment harassment under landlord-tenant law, tort law, or other state law, they do not substitute for the protections against discrimination and the remedies provided under the Act. Moreover, the fact that HUD has previously issued charges of discrimination involving quid pro quo or hostile environment harassment does not negate the need for this rule. Issue: A commenter asked HUD to abandon the rulemaking process and instead provide specific, clear guidance to the regulated community so that housing providers can ascertain the types of behavior that do and do not constitute harassment under the Fair Housing Act. Other commenters requested that HUD provide technical assistance on various aspects of the rule to residents, housing providers, and practitioners to ensure all parties know their rights under the law. HUD Response: HUD declines to abandon this rulemaking. This regulation is needed to formalize standards for assessing claims of harassment under the Fair Housing Act and to clarify when housing providers and others covered by the Act may be liable for illegal harassment or other discriminatory housing practices. It has been HUD's experience that there is significant misunderstanding among public and private housing providers about the circumstances under which they may be liable. This regulation provides greater clarity in making that assessment. HUD will continue to offer guidance and training on the Fair Housing Act generally and on this final rule, as needed. Issue: A commenter recommended that the rule expand the limits for damages in cases that establish sexual harassment in housing. HUD Response: HUD declines to make this change because it is unnecessary. The Act contains no limit on damages that may be awarded, specifically authorizing an award of ``actual damages.'' 42 U.S.C. 3612(g)(3); 3613(c)(1); 3614(d)(1)(B). Issue: A commenter asked HUD to consider expanding the time for filing sexual harassment complaints where a hostile environment case includes subsequent harassment that occurs many months after the initial act of sexual harassment. HUD Response: HUD declines to adopt this recommendation because the Fair Housing Act specifically defines the statute of limitations for filing complaints. It is one year after an alleged discriminatory housing practice occurred or terminated for a complaint with HUD and two years after an alleged discriminatory housing practice occurred or terminated for a civil action in federal district court or state court. See 42 U.S.C. 3610; 3613. If a violation is continuing, the limitations period runs from the date of the last occurrence or termination of the discriminatory act.\23\ --------------------------------------------------------------------------- \23\ See, e.g., Havens Realty Corp. v. Coleman, 455 U.S. 363, 380-81 (1982); Neudecker v. Boisclair Corp., 351 F.3d at 363 ; Spann v. Colonial Vill., Inc., 899 F.2d 24, 34-35 (D.C. Cir. 1990); Heights Cmty Congress v. Hilltop Realty, Inc., 774 F.2d 135, 139-41 (6th Cir. 1985). --------------------------------------------------------------------------- 1. Quid Pro Quo Harassment: Sec. 100.600(a)(1) Issue: A commenter asked how the rule would ``differentiate between a situation of involuntary quid pro quo that genuinely must be governed by the Act and a situation where one party is manipulating the rule following a mutually beneficial and agreed upon transaction.'' HUD Response: The rule's definition of quid pro quo harassment requires a request or demand that is ``unwelcome.'' A mutually beneficial and agreed upon transaction is not unwelcome and would not constitute quid pro quo harassment under the rule or the Act. It is important to note, however, that, as the rule states, if an individual [[Page 63061]] acquiesces to an unwelcome request or demand, unlawful quid pro quo harassment may have occurred. Moreover, if a housing provider regularly or routinely confers housing benefits based upon the granting of sexual favors, such conduct may constitute quid pro quo harassment or hostile environment harassment against others who do not welcome such conduct, regardless of whether any objectionable conduct is directed at them and regardless of whether the individuals who received favorable treatment willingly granted the sexual favors.\24\ Liability in all situations involving allegations of harassment must be determined on a case-by- case basis. --------------------------------------------------------------------------- \24\ Cf. EEOC Policy Guidance No. N-915.048, Employer Liability under Title VII for Sexual Favoritism (Jan. 12, 1990) (providing that widespread sexual favoritism based upon solicitations for and/ or the granting of sexual favors or other sexual conduct ``can form the basis of an implicit `quid pro quo' harassment claim for female employees, as well as a hostile environment claim for both women and men who find this offensive''). --------------------------------------------------------------------------- Issue: A commenter stated that the preamble to the proposed rule was vague in stating that ``a person is aggrieved if that person is denied or delayed in receiving a housing-related opportunity or benefit because another received the benefit.'' The commenter was concerned that this statement would require a PHA to identify, investigate, and document a defense to any tenant-perceived delay in receiving benefits. HUD Response: The quoted phrase is not vague when read in context, which explains the meaning of quid pro quo harassment under the Fair Housing Act. The phrase refers to a person who is aggrieved because he or she is denied a benefit that went to another in exchange for sexual favors, for example. Aggrieved persons under the Act and HUD's regulation are limited to those who were injured (or are about to be injured) by a discriminatory housing practice as defined in the Act. Neither the Fair Housing Act nor this final rule prohibits delays in receiving housing-related opportunities or benefits for nondiscriminatory reasons. If, however, an applicant or tenant alleges that he or she has been denied or delayed in receiving a benefit because others submitted to requests for sexual favors, the PHA should investigate to determine if quid pro quo or hostile environment harassment has occurred. 2. Hostile Environment Harassment: Sec. 100.600(a)(2) Issue: Several commenters recommended that HUD ensure consistency of the discussion of hostile environment harassment throughout the preamble in order to prevent any unintentional barriers for harassment victims seeking to bring claims under the Fair Housing Act. The commenters specifically stated that in one section of the preamble to the proposed rule, HUD defines ``hostile environment harassment'' to require unwelcome conduct because of a protected characteristic that ``unreasonably interferes'' with the use and enjoyment of a dwelling, or with the exercise of other rights protected by the Act. By contrast, the commenters stated, other sections of the preamble rightly omit the ``unreasonably'' qualifier when discussing hostile environment harassment. The commenters requested that the word ``unreasonably'' be removed from the discussion in the preamble because it is unnecessary and will create confusion. They stated that unwelcome conduct that is ``sufficiently severe or pervasive'' as to interfere with one's enjoyment of rights protected under the Act is in itself unreasonable. HUD Response: The term ``unreasonably'' does not appear in the definition of ``hostile environment harassment'' in the regulatory text of the proposed rule. The term ``unreasonably'' was used in the preamble to the proposed rule to convey how a claim of hostile environment would be evaluated; that is, from the perspective of a reasonable person in the aggrieved person's position. HUD agrees that the use of the term ``unreasonably'' in the preamble may have caused confusion by conflating the substantive standard with the method of proof. In this final rule, as was the case in the proposed rule, the definition of ``hostile environment harassment'' in Sec. 100.600(a)(2) is not phrased as requiring proof that unwelcome conduct ``unreasonably'' interfere with a right protected by the Fair Housing Act. But it remains that whether unwelcome conduct is sufficiently severe or pervasive as to interfere with rights protected by the Act, and therefore constitute hostile environment harassment, is evaluated from the perspective of a reasonable person in the aggrieved person's position. Issue: A commenter suggested that HUD include definitions and descriptions of ``bullying'' in this final rule because bullying is very similar to hostile environment harassment. HUD Response: HUD does not agree that it is necessary to add the word ``bullying'' to the final rule in order to cover conduct that could be considered bullying. Section 100.600(a)(2) of the proposed rule and of this final rule, which defines hostile environment harassment and specifies the factors to be considered when evaluating whether particular conduct creates a hostile environment in violation of the Act, is broadly worded and fully captures the concept of bullying because of a protected characteristic that the commenter seeks to include. Issue: A commenter said HUD should include social isolation and neglect as forms of harassment under the rule, especially when they occur with the intent to drive a person from his or her home or interfere with his or her enjoyment of a dwelling. According to the commenter, these actions have major implications for the psychological well-being of an individual. HUD Response: HUD appreciates that social isolation and neglect are serious concerns. This rule is limited to conduct engaged in because of a protected characteristic. If a tenant is subjected to unwanted severe or pervasive conduct because of a disability, for example, which leads to social isolation with the intent or effect of driving the tenant from his or her home or interfering with his or her enjoyment of a dwelling, such conduct could constitute hostile environment harassment under the standards set forth in the rule. Issue: A commenter said the rule could more clearly distinguish harassment from inappropriate behavior or disputes that do not rise to the level of harassment. Other commenters stated that they appreciated the rule's emphasis on the totality of the circumstances, which will ensure that mere disagreements, mistaken remarks, or isolated words spoken in the heat of the moment will not result in liability unless the totality of the circumstances establishes hostile environment harassment. HUD Response: HUD agrees that not every disagreement between persons involved in a housing transaction constitutes unlawful harassment because of a protected characteristic in violation of the Act and believes the rule appropriately captures the distinction. Section 100.600(a)(2) of the proposed rule and of this final rule defining hostile environment harassment requires that the unwelcome conduct be ``sufficiently severe or pervasive'' as to interfere with defined features of the housing transaction: The availability, sale, rental, or use or enjoyment of a dwelling; the terms, conditions, or privileges of the sale or rental, or the provision or enjoyment of services or facilities in connection therewith; or the availability, terms or conditions of a residential real estate-related transaction. [[Page 63062]] Issue: A commenter recommended that the final rule recognize the role of preferential treatment for services and living arrangements, except when provided because of disability, as a type of discrimination. The commenter said that preferential treatment is a means through which to encourage and reward secondary actors for their role in creating a hostile environment, and the rule should recognize it as such. The commenter also recommended that HUD request and make available data regarding repairs or upgrades so any non-monetary favor in exchange for harassment, by an agent not directly employed by the management or owner, may be determined. HUD Response: HUD declines to adopt the commenter's suggestions because the rule as currently proposed already accommodates the commenter's concerns. Providing preferential treatment that creates a hostile environment because of race, color, religion, sex, familial status, or national origin already violates the Fair Housing Act under the standards proposed in the rule. Moreover, HUD's regulations already contain illustrations as to this type of violation. Therefore, additional language regarding preferential treatment is not needed. In addition, processes for requesting and making available data regarding repairs or upgrades are outside the scope of this rule. HUD notes that in investigations, it requests data regarding repairs or upgrades as appropriate to determine whether a violation of the Fair Housing Act has occurred. Issue: Two commenters asked whether the rule would apply to situations in which residential property managers or other employees of a housing provider are harassed by the housing provider's tenants. One of the commenters explained that she was a resident of the building she managed, that she had a disability, and that she had suffered harassment and threats by other residents. HUD Response: The proposed standards generally would not apply to situations in which a property manager or other housing provider employee is harassed by the housing provider's tenants because such situations ordinarily do not involve a housing-related transaction covered by the Act. Where, however, a property manager is also a resident of the building that the property manager manages (e.g., a resident-manager), the property manager is entitled to the same protection from discriminatory harassment under the Act and under this final rule as any other resident. Additionally, Section 818 of the Act makes it unlawful to coerce, intimidate, threaten, or interfere with any person on account of the person having assisted others in enjoying or exercising their fair housing rights. Therefore, to the extent that a property manager or other housing provider employee (whether a resident or not) is subjected to coercion, intimidation, threats, or interference because he or she aided or encouraged other people in exercising or enjoying a right protected by the Act--e.g., by receiving and responding to one tenant's complaint of discriminatory harassment by another tenant--the manager or employee may be entitled to protection under the Act.\25\ --------------------------------------------------------------------------- \25\ A property manager may also be protected by Title VII, whether or not he or she resides at the housing. --------------------------------------------------------------------------- i. Totality of the Circumstances: Sec. 100.600(a)(2)(i) Issue: Some commenters requested that HUD clarify the definition of ``totality of the circumstances'' in Sec. 100.600(a)(2)(i) because, in the commenters' view, the proposed rule does not sufficiently explain the showing required to prove hostile environment harassment in violation of the Fair Housing Act. Other commenters supported HUD's standard for determining whether conduct constitutes a hostile environment, stating that the standard and its factors are clear and permit an appropriately individualized assessment of the facts of each case. These commenters stated that the rule's explanation of hostile environment harassment provides meaningful guidance to both housing providers and potential claimants. HUD Response: HUD believes the ``totality of the circumstances'' standard in this final rule provides an appropriate standard for assessing claims of hostile environment harassment, while also providing courts with the flexibility to consider the numerous and varied factual circumstances that may be relevant when assessing a specific claim. HUD therefore chooses not to alter the definition of the term ``totality of the circumstances,'' although it will add to the final rule the standard by which the evidence is to be evaluated, which is from the perspective of a reasonable person in the aggrieved person's position. Section 100.600(a)(2) defines what constitutes hostile environment harassment under the Act. In accordance with this provision, establishing a hostile environment harassment violation requires proving that: A person was subjected to unwelcome spoken, written, or physical conduct; the conduct was because of a protected characteristic; and the conduct was, considering the totality of the circumstances, sufficiently severe or pervasive as to interfere with or deprive the victim of his or her right to use and enjoy the housing or to exercise other rights protected by the Act. Whether a hostile environment harassment violation has occurred is a fact-specific inquiry, and the rule supplies a non-exhaustive list of factors that must be considered in making that determination. It would be impossible to quantify in the rule the amount of evidence necessary to make such a showing in every case involving a claim of hostile environment harassment. The additional instruction in the rule text, and not just the preamble, that the ``totality of the circumstances'' is to be evaluated from the perspective of a reasonable person in the aggrieved person's position will aid all parties in assessing whether a ``hostile environment'' has been created. Issue: HUD received several comments regarding the explanation in the preamble to the proposed rule that hostile environment harassment should be assessed from the perspective of a reasonable person in the aggrieved person's position. A commenter expressed concern that this standard is too subjective, stating that one reasonable person's measure may be different from another reasonable person's measure. Another commenter asked HUD to provide a definition of the term ``reasonable person.'' Other commenters approved of the standard articulated in the preamble to the proposed rule and commended HUD for recognizing that the reasonable person standard must take into account the circumstances of the aggrieved person. A commenter recommended that the rule text itself explicitly state this objective standard. Another commenter, however, recommended that HUD not add the standard to the rule text itself because such addition may invite courts to second- guess the rationality and behavior of the actual victim, rather than focusing on the conduct and its surrounding circumstances. HUD Response: As HUD explained in the preamble to the proposed rule, whether unwelcome conduct is sufficiently severe or pervasive to create a hostile housing environment is evaluated from the perspective of a reasonable person in the aggrieved person's position. This standard is an objective one, but ensures that an assessment of the totality of the circumstances includes consideration of whether persons of the same protected class and of like personal experience as [[Page 63063]] the plaintiff or complainant would find the challenged conduct to create a hostile environment. At the proposed rule stage, HUD chose not to add the ``reasonable person in the aggrieved person's position'' standard to the text of the rule itself. But in light of the confusion expressed by some of the commenters, HUD has added this standard to the text of the final rule discussing the totality of the circumstances standard. In adding this reasonable person standard for assessing the evidence to the rule text, HUD does not intend to create an additional requirement for proving a hostile environment harassment claim beyond the showing required under Sec. 100.600(a)(2) of the rule. The definition of hostile environment harassment in this final rule remains unchanged and focuses on defining the types of conduct that may establish a claim of hostile environment harassment under the Fair Housing Act. (A) Factors To Be Considered: Sec. 100.600(a)(2)(i)(A) Issue: Several commenters commended HUD's explanation in the preamble to the proposed rule that individuals have heightened rights within their home for privacy and freedom from unwelcome speech and conduct. Many commenters agreed with HUD that harassment in or around one's home can be far more intrusive, violative, and threatening than harassment in the more public environment of one's workplace. Some commenters said these considerations should be explicitly incorporated into the text of the rule itself. Commenters specifically requested that HUD revise proposed Sec. 100.600(a)(2)(i)(A) by adding as a factor to be considered in determining whether hostile environment harassment exists ``the heightened rights in or around one's home for privacy and freedom from harassment'' or ``the heightened reasonable expectation of privacy and freedom from harassment in one's home.'' Another commenter said that Sec. 100.600(a)(2)(i)(A) should expressly state that conduct occurring in one's home may result in a violation of the Fair Housing Act even though the same conduct in one's place of employment may not violate Title VII. HUD Response: HUD declines to add language regarding individuals' heightened rights within the home for privacy and freedom from unwelcome speech and conduct to the rule text in Sec. 100.600(a)(2)(i)(A). The non-exhaustive list of factors included in Sec. 100.600(a)(2)(i)(A) identifies circumstances that can be demonstrated with evidence during the adjudication of a claim of hostile environment harassment under the Act. Evidence regarding the ``location of the conduct,'' as explicitly identified in Sec. 100.600(a)(2)(i)(A), is a critical factor for consideration and will allow courts to take into account the heightened privacy and other rights that exist within the home when determining whether hostile environment harassment occurred. For similar reasons, HUD also declines to add language stating that harassing conduct may result in a violation of the Fair Housing Act even though such conduct might not violate Title VII. HUD believes that by establishing a hostile environment harassment standard tailored to the specific rights protected by the Fair Housing Act and by directing that hostile environment claims under the Act are to be evaluated by assessing the totality of the circumstances--including the location of the unwelcome conduct and the context in which it occurred--the final rule ensures that courts consider factors unique to the housing context when making the fact-specific determination of whether the particular conduct at issue violates the Act. Therefore, while HUD agrees that unwelcome conduct in or around the home can be particularly intrusive and threatening and may violate the Fair Housing Act even though the same or similar conduct in an employment setting may not violate Title VII, HUD does not believe the proposed additions to Sec. 100.600(a)(2)(i)(A) are necessary. Issue: A commenter supported HUD's identification of the relationship of the persons involved as a factor to be considered when determining whether hostile environment harassment has occurred, but recommended that the final rule further refine the concept. Specifically, in the homeowner's association context, the commenter drew distinctions between the relationships among the different resident-owners and between a board member and a resident-owner. The commenter also distinguished these relationships from landlord-tenant relationships. HUD Response: HUD appreciates these distinctions and believes the rule already accommodates them by requiring the relationship of the parties involved be taken into account in determining whether a hostile environment has been created. This is one of several factors that HUD identified for evaluating allegations of hostile environment harassment. In a community governed by a homeowner's association, for example, the influence an owner-board member has over another resident by virtue of his or her authority to make association policy, to approve homeowner requests, and to bring or adjudicate charges of association rule violations may be greater than a non-board member, and thus each person's relationship to the victim should be considered when assessing whether a hostile environment exists. No further refinement to the rule is necessary to address the commenter's concerns; nor is any further refinement desirable, as it would risk inadvertently inserting limiting factors into the otherwise broad and flexible totality of the circumstances test. (B) Physiological or Physical Harm: Sec. 100.600(a)(2)(i)(B) Issue: A commenter stated that Sec. 100.600(a)(2)(i)(B) of the proposed rule, which concerns psychological or physical harm, is confusing. The commenter requested that HUD clarify the meaning of this provision. HUD Response: HUD agrees that Sec. 100.600(a)(2)(i)(B) may be confusing and has revised this provision at the final rule stage; the revision is intended to clarify without altering the meaning of the provision. Proposed Sec. 100.600(a)(2)(i)(B) provided that ``Evidence of psychological or physical harm is relevant in determining whether a hostile environment was created, as well as the amount of damages to which an aggrieved person may be entitled. Neither psychological nor physical harm, however, must be demonstrated to prove that a hostile environment exists.'' Final Sec. 100.600(a)(2)(i)(B) provides that ``Neither psychological nor physical harm must be demonstrated to prove that a hostile environment exists. Evidence of psychological or physical harm may, however, be relevant in determining whether a hostile environment was created and, if so, the amount of damages to which an aggrieved person may be entitled.'' As explained at the proposed rule stage, evidence of such harm is but one of many factors that may be considered in assessing the totality of the circumstances. So long as the unwelcome conduct is sufficiently severe or pervasive as to interfere with or deprive the victim of a right protected by the Act, there is no need to also demonstrate psychological or physical injury in order to prove a hostile environment violation. ii. Title VII Affirmative Defense: Sec. 100.600(a)(2)(ii) Issue: HUD received several comments on Sec. 100.600(a)(2)(ii) of the proposed rule, which provides that the [[Page 63064]] Title VII affirmative defense to an employer's vicarious liability for hostile environment harassment by a supervisor does not apply to claims brought pursuant to the Fair Housing Act. Several commenters commended HUD's decision not to extend the Title VII affirmative defense to the Fair Housing Act and agreed with HUD that such a defense would be inappropriate in the housing context, in part because of the lack of an exhaustion requirement under the Fair Housing Act, as well as the differences between an agent in the employment context versus an agent in the housing context. Other commenters recommended that HUD apply the judicially-created Title VII affirmative defense to Fair Housing Act claims. One such commenter stated that HUD, by rule, cannot import a Title VII cause of action onto the Fair Housing Act without the judicially-created limitations on a Title VII employer's liability under that cause of action. Another commenter believed that HUD eliminated an existing affirmative defense for housing providers that is available in the employment context. Given the scope of potential harassment claims, this commenter found unwarranted HUD's position that the Title VII affirmative defense is not relevant to harassment in the housing context because, in HUD's view, a housing agent who harasses residents is inevitably aided by his or her agency relationship with the housing provider. In the commenter's view, a responsible housing provider who exercises reasonable care to prevent harassment, and who provides a complaint mechanism that a resident unreasonably fails to invoke, should be afforded the same affirmative defense available to employers in analogous situations. Another commenter asked HUD to reconsider its decision to reject the affirmative defense as it appears unfair and based on an assertion that agents of housing providers are equivalent to a supervisory employer in terms of their power over applicants and/ or tenants. HUD Response: After carefully considering the analysis provided by the commenters on both sides of the issue, HUD has retained its view that the Title VII affirmative defense is not appropriate to include as a defense under the Fair Housing Act. HUD has never found occasion to employ such a defense and remains unaware of any court having extended the Title VII affirmative defense to fair housing claims, and commenters did not identify any such case law. Moreover, unlike Title VII, which requires employees to exhaust their administrative remedies before filing an action in court, the Fair Housing Act has no exhaustion requirement, and nothing in the text of the Fair Housing Act otherwise indicates that Congress intended to permit a housing provider to avoid vicarious liability for discriminatory harassment perpetrated by its agents by establishing its own complaint process or procedure. To the contrary, the Act authorizes any aggrieved person to directly commence a civil action in federal or state court, whether or not the individual has previously chosen to file an administrative complaint with HUD.\26\ Therefore, as explained in the preamble to the proposed rule, the Title VII affirmative defense is not appropriately applied to harassment in the housing context because its adoption would impose burdens on victims of discriminatory harassment that are incompatible with the broad protections and streamlined enforcement mechanisms afforded by the Fair Housing Act. --------------------------------------------------------------------------- \26\ See 42 U.S.C. 3614(a). --------------------------------------------------------------------------- HUD notes that some comments on this issue demonstrated a misunderstanding of the potential scope of the Title VII affirmative defense. The Title VII affirmative defense does not apply to harassment claims based on direct liability. Thus, contrary to the perceptions of some commenters, the affirmative defense does not apply to cases in which an employer--or housing provider--knew or should have known of an agent or third-party's harassment and failed to stop it, because such cases involve direct rather than vicarious liability. Therefore, in exercising its power to promulgate rules to interpret and carry out the Act, HUD believes it would be inappropriate to add, for the first time, an affirmative defense that would require victims of hostile environment harassment--who are often housing insecure or otherwise especially vulnerable--to choose between the risk of retaliation by the perpetrator and the risk of losing their right to hold a housing provider liable for the acts of its agents. Instead, the traditional principles of vicarious liability--including those standards that hold a principal liable for an agent's conduct that is taken within the scope of employment, with the apparent authority of the principal, or that is otherwise aided by the agency relationship-- will continue to govern a housing provider's liability for harassment. While HUD declines to extend the Title VII affirmative defense to the Fair Housing Act, the development and dissemination of anti-harassment policies will still assist housing providers to avoid litigation by identifying and quickly addressing improper conduct by employees or other agents. Issue: A commenter requested that HUD create safe harbors from liability for housing providers for harassment by their agents and third-parties. Specifically, the commenter stated that liability for unknown and unintended harassment by an agent or third-party should not be imposed on a housing provider where the housing provider: (1) Provides periodic mandatory fair housing training for its employees and agents (including training related to harassment claims); (2) requires unaffiliated management companies to conduct similar training of their employees, report to the property owner on a regular basis about the steps it is taking to avoid fair housing claims generally, and promptly report any potential fair housing claim to a designated official of the housing provider; and (3) implements and publicizes a hotline or other secure communication mechanism whereby a tenant can confidentially notify the housing provider about possible harassment by employees or other tenants. Another commenter expressed concern that the rule as proposed would expand a PHA's exposure to liability by making the PHA liable for perceived hostile environment harassment that occurs beyond its knowledge or control and fails to create or incentivize any new remedies to protect tenants against hostile environment harassment. As a result, according to the commenter, the proposed rule raises the possibility that future litigation over alleged harassment might be driven by plaintiff attorneys' fees rather than the merit of the allegations or effective remedies. In light of these concerns, the commenter suggested that HUD revise the proposed rule to adopt defenses similar to those applicable to public agencies under California state law for injuries caused by dangerous conditions on the public agency's property. As described by the commenter, the State law defense provides that liability attaches to the public agency if the plaintiff establishes that: (1) The public employee's negligence or wrongful act or omission created the dangerous condition; or (2) the public entity had actual or constructive notice of the dangerous condition before the injury occurred. The commenter believes this standard incentivizes the public agency to maintain its property and train its staff in order to limit its exposure to liability and reduce the risk of injuries. [[Page 63065]] HUD Response: As explained in the preamble to the proposed rule, traditional principles of tort liability and agency law apply in fair housing cases. The standards for direct and vicarious liability established in this final rule continue to reflect such principles and do not impose any new legal obligations or create or define new agency relationships or duties of care. For the same reasons that HUD does not interpret the Fair Housing Act to import the Title VII affirmative defense for a claim of hostile environment harassment by the provider's agent, HUD does not believe the requested safe harbor or state law- derived defense from liability is appropriate. The California State law identified by the commenter essentially imposes a negligence standard for public agency liability, which is akin to the standard of direct liability that governs Fair Housing Act claims under Sec. 100.7(a)(1)(ii). In addition, under traditional principles of agency law, a housing provider may be held vicariously liable for the discriminatory acts of an employee or agent regardless of whether the housing provider knew of or intended the discriminatory conduct where the employee was acting within scope of his or her agency, or where the harassment was aided by the agency relationship. HUD believes that traditional tort and agency law standards for assessing liability under the Act will encourage housing providers to provide appropriate training for their staff and to ensure compliance with the Act. Issue: A commenter asserted that the proposed rule, including HUD's decision not to adopt the Title VII affirmative defense, raises Federalism implications. The commenter stated that the proposed rule creates a cause of action based on Title VII law that could, ostensibly, be brought against a State, even when the actions are performed by a city or other sub-recipient of funds, and obviate the State's sovereign immunity despite its ongoing assertion that it has not waived such sovereign immunity. The commenter said that the rule would do so while removing the judicially-created Title VII affirmative defense. The commenter recommended that HUD withdraw the rule or create a specific carve-out for actions against a State that limits and defines the extent of vicarious liability, including a safe-haven for conduct or policy akin to an affirmative defense. HUD Response: Executive Order 13132 (entitled ``Federalism'') prohibits an agency from publishing any rule that has federalism implications if the rule either (1) imposes substantial, direct compliance costs on state and local governments and is not required by statute, or (2) preempts state law, unless the agency meets the consultation and funding requirements of section 6 of the Executive Order. Under the Executive Order, Federalism implications are those having substantial direct effects on states or local governments (individually or collectively), on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government. This final rule does not have such implications. As discussed elsewhere, the rule creates no new cause of action, liability or obligation on the part of any housing provider, including a State. The rule interprets the Fair Housing Act's prohibition on discriminatory harassment, and in doing so, neither alters the substantive prohibitions against discrimination in the Act nor creates enhanced liability or compliance costs for States or any other entities or individuals. Similarly, the rule does not alter any sovereign immunity protections that a State may have under the Eleventh Amendment. In addition, the rule does not remove a pre-existing affirmative defense, because no court of which HUD is aware has ever applied the Title VII affirmative defense or any other affirmative defense or safe harbor to Fair Housing Act claims; nor has HUD ever applied such a standard. HUD notes further that creating an affirmative defense or safe harbor for States would not be consistent with Congressional intent, for the reasons discussed above. b. Type of Conduct: Sec. 100.600(b) Issue: A commenter inquired whether a verbal or written account from an aggrieved tenant would be enough to comprise a showing of hostile environment harassment under the Act. HUD Response: A verbal or written account from an aggrieved tenant may be enough to provide notice to a housing provider that a hostile environment may be occurring, but whether it would be sufficient to establish that the conduct is sufficiently severe or pervasive to create a hostile environment depends on the totality of the circumstances. c. Number of Incidents: Sec. 100.600(c) Issue: A commenter expressed concern that the proposed rule includes both a ``totality of the circumstances standard'' and a ``single incident standard'' and asked HUD to provide more descriptive language to determine the existence of a hostile environment based on such standards. The commenter asked HUD to clarify or provide examples of when a single incident of harassment would be sufficient to create a hostile environment. Several other commenters expressed approval of Sec. 100.600(c) of the proposed rule, which provides that a single incident of harassment because of race, color, religion, sex, familial status, national origin, or disability may constitute a discriminatory housing practice, where the incident is severe, or evidences a quid pro quo. Other commenters stated that in some cases a single act can be so severe as to deprive individuals of their right to use and enjoy their housing. HUD Response: HUD did not intend to propose two different standards for determining whether hostile environment harassment has occurred. To avoid confusion and better clarify the relationship between Sec. 100.600(c) and Sec. 100.600(a)(2), HUD is revising Sec. 100.600(c) at this final rule stage. Section 100.600(a)(2) of the rule provides the only standard that must be met to prove a claim of hostile environment harassment under the Act--namely, that: A person was subjected to unwelcome spoken, written, or physical conduct; the conduct was because of a protected characteristic; and the conduct was sufficiently severe or pervasive as to interfere with or deprive the victim of his or her right to use and enjoy the housing or to exercise other rights protected by the Act. As provided in Sec. 100.600(a)(2)(i), a determination of whether this standard has been met is to be based on the totality of the circumstances. Section 100.600(c) is included in the rule to make clear that a single incident of harassment because of a protected characteristic, if sufficiently severe, can constitute a hostile environment harassment violation (as defined in Sec. 100.600(a)(2)). Whether a claim of hostile environment harassment is based on a single incident or repeated incidents of unwelcome conduct, an assessment of the totality of the circumstances is still required. For example, the nature of the unwelcome conduct (e.g., whether it was spoken, written and/or physical) and the location of the conduct (e.g., whether it occurred inside the victim's apartment or in a common space), among other potential considerations, would factor into an assessment of whether a single incident of harassment was sufficiently severe to interfere with or deprive the victim of his or her right to use and enjoy the housing or to exercise other rights protected by the Act. HUD is revising proposed Sec. 100.600(c) at this final rule stage as follows. [[Page 63066]] Proposed Sec. 100.600(c) provided that: ``A single incident of harassment because of race, color, religion, sex, familial status, national origin, or handicap may constitute a discriminatory housing practice, where the incident is severe, or evidences a quid pro quo.'' Final Sec. 100.600(c) now provides: ``A single incident of harassment because of race, color, religion, sex, familial status, national origin, or handicap may constitute a discriminatory housing practice, where the incident is sufficiently severe to create a hostile environment, or evidences a quid pro quo.'' B. Illustrations: Sec. Sec. 100.60, 100.65, 100.80, 100.90, 100.120, 100.130, and 100.135 Issue: Several commenters supported the illustrations included throughout the proposed rule and asked HUD to provide additional examples of prohibited practices in the final rule. They requested more examples of: Unwelcome conduct; how quid pro quo harassment occurs with respect to protected classes other than sex; single incidents that constitute a hostile environment; and when direct liability exists. Commenters also recommended that HUD add to the final rule examples clarifying the relationship between age and disability and add examples of harassment of pregnant women, Muslims, persons with limited English proficiency, persons with mental health-related disabilities or HIV/ AIDS, and persons who assert their rights to organize. Another commenter stated that HUD has provided useful illustrations of what does not violate the Act in other fair housing contexts, and requested that HUD do the same here, citing 24 CFR 100.205(b) (concerning the impracticality of meeting the Act's design and construction standards). HUD Response: HUD retains the illustrations contained in the proposed rule, but otherwise declines to add more illustrations to the final rule. The rule contains numerous illustrations of possible quid pro quo and hostile environment harassment referencing all protected classes. But whether illegal harassment has or has not occurred in a particular situation is fact-specific and must be determined on a case- by-case basis. For this reason, the illustrations provided are simply more specific descriptions of the legal standard, e.g., conditioning the availability of housing on a person's response to sexual harassment illustrates an unlawful refusal to sell or rent. Providing illustrations as to what does not violate the Act would not be appropriate because of the necessarily fact-specific nature of such an inquiry. HUD notes that Sec. 100.205(b), which the commenter cited, does not describe conduct that does not violate the Act, but rather provides examples of when the impracticality exception to the Act's design and construction requirements is applicable. Lastly, some of the suggested examples are outside the scope of the Act, e.g., the right to organize, but HUD notes that persons would be protected by the Act to the extent the harassment is because of their race, color, religion, sex, familial status, national origin, or disability. C. Liability for Discriminatory Housing Practices: Sec. 100.7 a. Direct Liability for One's Own Discriminatory Conduct: Sec. 100.7(a)(1)(i) Issue: A commenter stated that the language in Sec. 100.7(a)(1)(i), which states that a person is directly liable for the person's own conduct that results in a discriminatory housing practice, may lead to the liability of innocent actors and third-parties who somehow contributed to an illegal discriminatory action. The commenter gave as an example a situation in which a person supplied the pen that a housing provider used to make notes on an application that the housing provider later rejected because of a protected characteristic of the applicant. HUD Response: The rule creates no new or enhanced forms of liability. As discussed in the preamble of the proposed rule, Sec. 100.7(a)(1)(i) does nothing more than restate the most basic form of direct liability, i.e., that a person is directly liable for his or her own discriminatory housing practices, as defined by the Act. Whether a person's conduct constitutes a discriminatory housing practice under sections 804-806 or 818 of the Act depends upon the specific facts. b. Direct Liability for Negligent Failure To Correct and End Discrimination: Sec. 100.7(a)(1)(ii) and (iii) Issue: Several commenters expressed concern about the ``should have known'' standard in proposed Sec. 100.7(a)(1)(ii) and (iii), which states that a person is directly liable for ``(ii) [f]ailing to take prompt action to correct and end a discriminatory housing practice by that person's employee or agent, where the person knew or should have known of the discriminatory conduct,'' and ``(iii) [f]ailing to fulfill a duty to take prompt action to correct and end a discriminatory housing practice by a third-party, where the person knew or should have known of the discriminatory conduct . . . '' (emphasis added). Some commenters stated that this standard creates almost certain liability for landlords and that requiring actual knowledge would be more fair to property owners because liability would only attach for failing to act on known discrimination. A commenter stated that the final rule should limit liability where a housing provider has limited knowledge of misconduct. In contrast, other commenters stated that the ``knew or should have known'' standard is reasonable and consistent with the Fair Housing Act, legal negligence principles, and business practices of housing providers. One commenter complained that the proposed rule appears to require actual knowledge, even though the standard only requires that a defendant ``should have known'' of the harassment. Commenters asked HUD to clarify how a housing provider ``should have known'' about harassment, especially in the context of tenant-on- tenant harassment. A commenter questioned what the housing provider needs to know before liability attaches and whether the housing provider needs to know that the harasser's actions violate the Fair Housing Act or only that the harasser took some action toward the victim. Several commenters expressed concern that a PHA might be liable when a housing voucher holder is harassed but neither the apartment owner nor voucher holder informs the housing agency about the harassment. One commenter expressed a similar concern that owners living in another city or state may not learn that harassment is taking place on their property unless the tenant tells the owner, and another commenter asked about a PHA's potential liability when harassment occurs over the internet but is unknown to the housing agency. HUD Response: The ``knew or should have known'' standard is well established in civil rights and tort law.\27\ A housing provider ``should have known'' of the harassment of one resident by another when the housing provider had knowledge from which a reasonable person would conclude that the harassment was occurring. Such knowledge can come from, for example, the harassed resident, another resident, [[Page 63067]] or a friend of the harassed resident.\28\ There is no requirement that the resident contact the housing provider about the harassment, only that the housing provider have knowledge from which a reasonable person would conclude that harassment was occurring. If the housing provider has no information from which a reasonable person would conclude that one resident or a third-party was harassing another resident, the housing provider is not liable for failing to take action to correct and end the harassment. If the knowledge component is not met, a housing provider cannot be held liable for a resident's or third- party's discriminatory conduct. HUD disagrees that this standard will subject landlords to certain liability. Application of this standard to the liability provisions of the rule helps clarify the Act's coverage for residents and housing providers. It is intended to help guide housing providers in their assessment of when to intervene to prevent or end discriminatory conduct. HUD encourages housing providers to create safe, welcoming, and responsive housing environments by regularly training staff, developing and publicizing anti- discrimination policies, and acting quickly to resolve complaints once sufficient information exists that would lead a reasonable person to conclude that harassment was occurring. --------------------------------------------------------------------------- \27\ As the Supreme Court has recognized, fair housing actions are essentially tort actions. See Meyer v. Holley, 537 U.S. 280, 285 (2003) (citing Curtis v. Loether, 415 U.S. 189, 195-96 (1974)); see also Burlington Indus. v. Ellerth, 524 U.S. 742, 759 (``An employer is negligent with respect to sexual harassment if it knew or should have known about the conduct and failed to stop it. Negligence sets a minimum standard for employer liability under Title VII. . . .'') (emphasis added). \28\ See, e.g., Neudecker v. Boisclair Corp., 351 F.3d at 364 (owner may be liable for acts of tenants and management's children after failing to respond to plaintiff's complaints of harassment); Bradley v. Carydale Enterprises, 707 F. Supp. 217 (E.D. Va. 1989) (finding that owners and managers' failure to address one tenant's complaints of racial harassment by another tenant stated a claim under 42 U.S.C. 1981 and 1982). --------------------------------------------------------------------------- Issue: A commenter was concerned that Sec. 100.7(a)(1)(ii) is seeking to hold the agent liable for the actions of its principal, contrary to Supreme Court precedent, and asked why this provision is necessary in light of proposed Sec. 100.7(b) (vicarious liability), which states that the housing provider is already liable for the unlawful actions of the agent, whether known or not. HUD Response: Section 100.7(a)(1)(ii) addresses a principal's direct liability for the principal's own negligent conduct in overseeing (or failing to oversee) its agent or employee. Under the negligence theory of direct liability, the principal is liable only if the principal knew or should have known of the agent's discriminatory conduct and failed to take corrective action to end it. Section 100.7(b), by contrast, holds the principal vicariously liable for the discriminatory conduct of its agent, regardless of whether the principal knew or should have known of the agent's conduct. As the commenter noted, an agent is not vicariously liable for the principal's conduct, but is directly liable for his or her own actions. Section 100.7 does not create liability that does not already exist; it does not hold the agent liable for the conduct of the principal, and it is entirely consistent with traditional agency principles and Supreme Court precedent. Issue: A commenter asked for clarification of the term ``third- party'' in Sec. 100.7(a)(1)(iii). The commenter was concerned that if left undefined, the term would include everyone. The commenter asked HUD to limit the term to what the commenter perceived to be HUD's primary concern--``liability resulting from a landlord's failure to assist a tenant subject to another tenant's harassment.'' HUD Response: HUD does not agree that its use of the term ``third- party'' requires further clarification in the text of the rule. In the context of the rule, liability for discriminatory conduct by a ``third- party'' is appropriately limited to a non-employee or non-agent who engaged in quid pro quo or hostile environment harassment of which the housing provider knew or should have known and had the power to correct. Issue: A commenter stated that it is unclear from the proposed rule whether the obligation in proposed Sec. 100.7(a)(1)(iii) to take action to end a discriminatory housing practice by a third-party must be derived from a contract, lease, or law, or whether it could be derived from these sources. The commenter also requested that HUD clarify in the rule whether generic lease provisions related to the use and enjoyment of one's home that are found in almost every lease would be enough to create the obligation and related liability contemplated in Sec. 100.7(a)(1)(iii). Another commenter expressed a concern that housing providers would take steps to minimize their liability for failing to take corrective action by revising their leases and other documents so that they do not create a duty to protect tenants. A commenter expressed concern that the term ``duty,'' incorporated from other laws and contracts, is difficult to fully assess and therefore bound to create unanticipated consequences. HUD Response: HUD recognizes that proposed Sec. 100.7(a)(1)(iii) may have caused some confusion, so HUD has reworded the provision in the final rule. Proposed Sec. 100.7(a)(1)(iii) stated that a person is directly liable for ``failing to fulfill a duty to take prompt action to correct and end a discriminatory housing practice by a third-party, where the person knew or should have known of the discriminatory conduct. The duty to take prompt action to correct and end a discriminatory housing practice by a third-party derives from an obligation to the aggrieved person created by contract or lease (including bylaws or other rules of a homeowner's association, condominium or cooperative), or by federal, state or local law.'' Revised section 100.7(a)(1)(iii) of this final rule provides that a person is directly liable for ``failing to take prompt action to correct and end a discriminatory housing practice by a third-party, where the person knew or should have known of the discriminatory conduct and had the power to correct it. The power to take prompt action to correct a discriminatory housing practice by a third-party depends upon the extent of control or any other legal responsibility the person may have with respect to the conduct of such third-party.'' The final rule does not use the term ``duty,'' and no longer identifies specific categories of potential sources for such a duty. A housing provider's obligation to take prompt action to correct and end a discriminatory housing practice by a third-party derives from the Fair Housing Act itself, and its liability for not correcting the discriminatory conduct of which it knew or should have known depends upon the extent of the housing provider's control or any other legal responsibility the provider may have with respect to the conduct of such third-party.\29\ For example, when a housing provider enters into a lease agreement with a tenant, the lease typically obligates the housing provider to exercise reasonable care to protect the residents' safety and curtail unlawful conduct in areas under the housing provider's control, whether or not the lease contains specific language creating that responsibility. Even if the lease does not expressly create such obligations, the power to act may derive from other legal responsibilities or the operation of law.\30\ --------------------------------------------------------------------------- \29\ See, e.g., Neudecker v. Boisclair Corp., 351 F. 3d at 364 (owner may be liable for acts of tenants and management's children after failing to respond to plaintiff's complaints of harassment); Fahnbulleh v. GFZ Realty, LLC, 795 F. Supp. 2d 360, 364-65 (D. Md. 2011) (denying landlord's motion to dismiss because the Act imposes no categorical rule against landlord liability for tenant-on-tenant harassment); Reeves v. Carrollsburg Condo. Unit Owners Ass'n, 1997 U.S. Dist. LEXIS 21762, *26 (D.D.C. 1997) (condo association that knew of harassment by resident but failed to take corrective actions may violate Act). \30\ See, e.g., Wilstein v. San Tropai Condo. Master Ass'n, 1999 U.S. Dist. LEXIS 7031, *28-33 (N.D. Ill. Apr. 21, 1999) (rejecting condo association's argument that it had no duty to stop harassment of plaintiff by other residents and holding that association could be liable where evidence indicated that association knew of the harassment and bylaws authorized the association to regulate such conduct); see also Bradley v. Carydale Enterprises, 707 F. Supp. 217 (E.D. Va. 1989) (finding that owners and managers' failure to address one tenant's racial harassment of a neighboring tenant states a claim under 42 U.S.C. 1981, 1982). --------------------------------------------------------------------------- [[Page 63068]] Issue: A commenter expressed concern that proposed Sec. 100.7(a)(1)(iii) creates liability on the part of a community association (homeowner association, condominium or cooperative) for the illegal acts of residents over whom they have no control. The commenter urged HUD to remove or revise the proposed rule's extension of direct liability to community associations for the discriminatory actions of non-agents. The commenter stated that community associations generally lack legal authority to mandate that residents take actions described in the preamble of the proposed rule because the associations cannot evict homeowners or otherwise impose conditions not specifically authorized by the association's covenants, conditions, and restrictions (CC&Rs) or state law. The commenter suggested that if the language in Sec. 100.7(a)(1)(iii) remains, it should be modified to clearly state which terms and conditions in association bylaws and regulations constitute a duty on the part of an association or its agents to investigate and punish residents for illegal discriminatory housing practices. HUD Response: As noted above, HUD has slightly revised Sec. 100.7(a)(1)(iii) to clarify that a housing provider is liable under the Fair Housing Act for third-party conduct if the provider knew or should have known of the discriminatory conduct, has the power to correct it, and failed to do so. HUD also notes that the rule does not add any new forms of liability under the Act or create obligations that do not otherwise exist. The rule does not impose vicarious liability (see Sec. 100.7(b)) on a community association for the actions of persons who are not its agents. Section 100.7(a)(1)(ii) describes a community association's liability for its own negligent supervision of its agents, and Sec. 100.7(a)(1)(iii) describes a community association's liability for its own negligence for failing to take prompt action to correct and end a discriminatory housing practice by a third-party. With respect to Sec. 100.7(a)(1)(iii), the rule requires that when a community association has the power to act to correct a discriminatory housing practice by a third party of which it knows or should have known, the community association must do so. As the commenter recognizes, a community association generally has the power to respond to third-party harassment by imposing conditions authorized by the association's CC&Rs or by other legal authority.\31\ Community associations regularly require residents to comply with CC&Rs and community rules through such mechanisms as notices of violations, threats of fines, and fines. HUD understands that community associations may not always have the ability to deny a unit owner access to his or her dwelling; the rule merely requires the community association to take whatever actions it legally can take to end the harassing conduct. --------------------------------------------------------------------------- \31\ See, e.g., Wilstein v. San Tropai Condo. Master Ass'n, supra*28-33; Reeves v. Carrollsburg Condo. Unit Owners Ass'n, 1997 U.S. Dist. LEXIS 21762, *26. See also Freeman v. Dal-Tile Corp., 750 F. 3d 413, 422-23 (4th Cir. 2014) (holding that ``an employer is liable under Title VII for third parties creating a hostile work environment if the employer knew or should have known of the harassment and failed to take prompt remedial action reasonably calculated to end [it].'') (internal quotation marks and citations omitted); Galdamez v. Potter, 415 F. 3d 1015, 1022 (9th Cir. 2005) (``An employer may be held liable for the actionable third-party harassment of its employees where it ratifies or condones the conduct by failing to investigate and remedy it after learning of it.''). --------------------------------------------------------------------------- Issue: A few commenters suggested that HUD should reconsider imposing liability on a landlord for tenant-on-tenant harassment because the law in this area is not well-settled. The commenters expressed concern that proposed Sec. 100.7(a)(1)(iii) exceeds the scope of the Act by expanding liability for housing providers to include liability for third-party harassment of a resident when the housing provider did not act with discriminatory intent. One commenter, relying on Title VII case law and an interpretation of the phrase ``because of,'' stated that a landlord must have acted with discriminatory intent in order to be liable under the Fair Housing Act. Another commenter stated that although section 804(a) of the Fair Housing Act does not require a showing of intentional discrimination, claims brought under sections 804(b) and 817 of the Act do, citing Francis v. King Park Manor, Inc., 91 F. Supp. 3d 420 (E.D.N.Y. 2015). Another comment stated that to establish a housing provider's liability for failing to take action to correct third-party harassment, the plaintiff must show not just that the housing provider failed to correct the harassment but also that the housing provider did so because of animus against the victim due to a protected characteristic. A commenter pointed to Lawrence v. Courtyards of Deerwood Ass'n, Inc., 318 F. Supp. 2d 1133 (S.D. Fla. 2004), as an example of a case in which the court dismissed the fair housing claim against the housing provider because the plaintiffs failed to establish that the housing provider's ineffective response to the harassment was due to racial animus. Commenters also pointed to Ohio Civil Rights Comm'n v. Akron Metro. Hous. Auth., 892 NE.2d 415, 420 (Ohio 2008), in which the court declined to impose liability on landlords for failing to take corrective action in response to discriminatory harassment committed by the landlord's tenants. A commenter also suggested that not requiring discriminatory animus on the part of the housing provider would amount to strict liability. The commenters proposed that in light of these contrary federal and state court decisions, HUD should require proof of some degree of animus by the housing provider before subjecting the provider to direct liability for the acts of third parties. HUD Response: HUD does not agree that a housing provider's failure to act to correct third-party harassment must be motivated by a discriminatory intent or animus before the provider can be held liable for a Fair Housing Act violation. In reaching this conclusion, HUD considered its own experience in administering and enforcing the Fair Housing Act, the broad remedial purposes of the Act,\32\ relevant case law including the Supreme Court's recent ruling in Texas Department of Community Affairs v. Inclusive Communities Project, Inc. holding that the Fair Housing Act is not limited to claims of intentional discrimination, and the views of the EEOC regarding Title VII. The case law cited by the commenters fails to support the proposition that the Fair Housing Act requires discriminatory intent in order to find a housing provider liable for its negligent failure to correct resident- on-resident or other third-party discriminatory conduct. The district court decision in Francis v. Kings Park Manor is the sole exception to that principle, and HUD disagrees with its ruling. HUD notes that this decision is on appeal to the Second Circuit. --------------------------------------------------------------------------- \32\ See e.g., Havens Realty Corp. v. Coleman, 455 U.S. 363, 380 (1982) (Congress intended Fair Housing Act to be broadly remedial); cf. Jones v. Alfred H. Mayer Co., 392 U.S. 409, 413 (1968) (describing the Fair Housing Act as ``a comprehensive open housing law''); 42 U.S.C. 3601 (``It is the policy of the United States to provide, within constitutional limitations, for fair housing throughout the United States.''). --------------------------------------------------------------------------- Section 100.7(a)(1)(iii) sets out a negligence standard of liability, which does not require proof of discriminatory [[Page 63069]] intent or animus on the part of the provider, but is far from strict liability. Under this standard, a plaintiff or the charging party must prove three elements to establish a housing provider's liability for third-party harassment: (1) The third-party created a hostile environment for the plaintiff or complainant; (2) the housing provider knew or should have known about the conduct creating the hostile environment; and (3) the housing provider failed to take prompt action to correct and end the harassment while having the power to do so. HUD does not agree that a fourth element--that the housing provider's failure to act was more than negligent, and was motivated by discriminatory intent--is necessary or appropriate. Contrary to one comment, the Supreme Court in Inclusive Communities Project has already ruled that the ``because of'' clause in the Fair Housing Act does not require proof of discriminatory intent. While not addressing every aspect of the cited decisions, HUD notes the following: In Lawrence v. Courtyards of Deerwood Ass'n, cited by another commenter, the court dismissed the discriminatory harassment claim not for lack of discriminatory intent on the part of the landlord, but because it found, inter alia, that the dispute did not involve discriminatory harassment of one tenant by another but instead reflected mutual antagonism between two tenants. The court in Lawrence distinguished Reeves v. Carrollsburg Condo. Unit Owners Ass'n, 1997 U.S. Dist. LEXIS 21762, *22 (D.D.C 1997), which held the landlord liable under the Fair Housing Act for its failure to adequately address sexual harassment of one tenant by another because ``the [Carrollsburg Condo] association's by-laws specifically authorized the association to curtail conduct that contravened the law'' and provided that a violation of local or federal law was a violation of the association rules.\33\ --------------------------------------------------------------------------- \33\ Lawrence v. Courtyards of Deerwood Ass'n, 318 F. Supp. 2d at 1149 (citing Reeves v. Carrollsburg Condo. Unit Owners Ass'n, 1997 U.S. Dist. LEXIS 21762 at *22. --------------------------------------------------------------------------- Finally, the state court decision cited by one commenter did not involve claims under the Fair Housing Act and does not provide reason for HUD to alter Sec. 100.7(a)(1)(iii) at the final rule stage. In Ohio Civil Rights Commission v. Akron Metropolitan Housing Authority, the Ohio Supreme Court's refusal to hold a landlord liable under a state civil rights law for failing to take corrective action in response to one tenant's racial harassment of another tenant was premised on an incorrect reading of Title VII jurisprudence. The court misconstrued Title VII case law to require an agency relationship between an employer and a perpetrator of harassment in order to hold the employer liable for negligently failing to stop sexual harassment by the perpetrator.\34\ In fact, under Title VII, an agency relationship is not required in order to hold employers liable for negligently failing to stop discriminatory harassment of which the employer knew or should have known. Both the EEOC and the federal courts have recognized that an employer may be held liable for negligently failing to stop discriminatory harassment in the workplace by non-employees or non-agents.\35\ The principle of liability codified in Sec. 100.7(a)(1)(iii) of this final rule is consistent with these Title VII authorities and, in HUD's view, appropriately serves the Fair Housing Act's parallel antidiscrimination objectives in the housing context. In sum, the proposed rule and this final rule reflect HUD's considered judgment, consistent with prevailing precedent and EEOC regulations, that a housing provider (including a homeowner's association) or property manager is liable under the Act for negligently failing to take corrective action against a third-party harasser when the provider or manager knew or should have known of the harassment and had the power to end it. In light of the above, HUD declines to make the proposed revisions to the final rule. --------------------------------------------------------------------------- \34\ 892 NE.2d at 419-20. \35\ See 29 CFR 1604.11(e) (``An employer may also be responsible for the acts of non-employees, with respect to sexual harassment of employees in the workplace, where there employer (or its agents or supervisory employees) knows or should have known of the conduct and fails to take immediate and appropriate corrective action.''); see also, e.g., Freeman v. Dal-Tile Corp., 750 F.3d 413, 422-24 (4th Cir. 2014) (employer potentially liable for failing to address discriminatory harassment by a customer); Lockard v. Pizza Hut, Inc., 162 F.3d 1062, 1072-75 (10th Cir. 1998) (same; collecting cases recognizing employer liability for failing to correct third- party harassment). --------------------------------------------------------------------------- Issue: A commenter stated that the imposition of liability on private landlords for tenant-on-tenant harassment is inappropriate and will have several negative consequences. The commenter stated that private owners do not have the expertise or resources to undertake what is essentially a social services function to mediate disputes between neighbors. In addition, the commenter expressed concern that the proposed rule could make it more difficult and risky for property owners to take affirmative steps to operate racially integrated housing. The commenter stated that the rule will be an economic disincentive for individuals, companies, and other investors to engage in the business of renting residential real estate and that the Section 8 voucher program depends on the participation of these private entities in order to achieve other fair housing goals. The commenter expressed concern that the effect of the proposed rule will be to reduce the supply of available affordable units, thus disproportionately harming low-income families. Other commenters raised concerns that landlords, when confronted by tenants who mutually accuse each other of harassment, will be unable to take necessary corrective actions because of the rule's prohibition against moving or causing injury to a complaining tenant, or will reprimand the wrong tenant because they lack expertise with investigations. Numerous other commenters supported the rule's recognition that a housing provider may be directly liable for harassment of a tenant by the housing provider's employee or a third-party. These commenters stated that any suggestion that this rule will unduly burden housing providers is exaggerated, that the rule is wholly consistent with the ordinary responsibilities of housing providers to ensure habitability, and that housing providers are familiar with the tools they have to enforce their own rules--tools they frequently wield. HUD Response: The rule does not create new or enhanced liabilities for housing providers, including those who participate in the Section 8 program. HUD believes that this rule will help clarify the obligations that housing providers already have in offering and maintaining housing environments free from discrimination and that comply with the Fair Housing Act. We are long past the time when racial harassment is a tolerable price for integrated housing; a housing provider is responsible for maintaining its properties free from all discrimination prohibited by the Fair Housing Act. Under the Act, discriminatory practices are those that violate sections 804, 805, 806, or 818. Such practices do not encompass all incivilities, and thus it is important to note that not every quarrel among neighbors amounts to a violation of the Fair Housing Act.\36\ Ending harassing or [[Page 63070]] otherwise discriminatory conduct may necessitate evicting the tenant who has engaged in the conduct, not the aggrieved tenant.\37\ The Act does not, however, prohibit housing providers from offering to move an aggrieved tenant, as long as that tenant may refuse the offer without consequence or retaliation. --------------------------------------------------------------------------- \36\ See, e.g., Bloch v. Frischholz, 587 F.3d at 783 (quoting Halprin v. Prairie Single Family Homes of Dearborn Park Ass'n, 388 F.3d 327, 330 (7th Cir. 2004) (noting that interference under Sec. 818 ``is more than a `quarrel among neighbors' ''); Sporn v. Ocean Colony Condominium Assn, 173 F. Supp. 2d 244, 251-52 (D.N.J. 2001) (noting that section 818 ``does not [] impose a code of civility'' on neighbors); United States v. Weisz, 914 F. Supp. 1050, 1054-55 (S.D.N.Y. 1996) (holding that allegations that Jewish neighbor harassed complainants because of their religion were ``nothing more than a series of skirmishes in an unfortunate war between neighbors''). But see Ohana v. 180 Prospect Place, 996 F. Supp. 238, 243 (E.D.N.Y. 1998) (neighbors who intentionally intrude upon quietude of another's home may violate Act). \37\ See, e.g., Miller v. Towne Oaks East Apartments, 797 F. Supp. 557, 562 (E.D. Tex.1992) (finding landlord liable for violating Act by evicting both harasser and victim of harassment instead of only harasser). --------------------------------------------------------------------------- Issue: Some commenters stated that the proposed rule outlining third-party liability conflicts with HUD's PIH Notice 2015-19, titled Guidance for Public Housing Agencies (PHAs) and Owners of Federally- Assisted Housing on Excluding the Use of Arrest Records in Housing Decisions. One commenter was concerned that PIH Notice 2015-19 makes it harder for PHAs to correct situations that may lead to hostile environment harassment, while the proposed harassment rule would make it easier for PHAs to be held liable for the activities of tenants who take actions against other tenants to create a hostile environment. Another commenter was concerned that PHAs would be forced to choose whether to comply with HUD's harassment rule or with HUD's Notice, which prohibits the use of an arrest record as evidence of criminal activity that can support an adverse admission, termination, or eviction decision. These commenters therefore asked HUD to remove third-party liability from the rule. HUD Response: HUD believes the commenters' concerns are misplaced because there is no conflict between this rule and PIH Notice 2015-19. The rule does not add any new forms of liability under the Fair Housing Act and the formalization of clear and consistent standards for evaluating harassment claims under the Act does not conflict with the requirements of the PIH Notice. Compliance with PIH Notice 2015-19 does not prevent a PHA from considering reliable evidence of relevant criminal activity when considering how to respond to complaints of harassment. Nor does this rule require a PHA to make use of arrest records to determine whether discriminatory harassment has occurred. Consistent with traditional tort liability principles, as well as current federal Fair Housing Act jurisprudence, this rule codifies HUD's longstanding view that a property owner, including a PHA, may be held liable for failing to take corrective action within its power in response to tenant-on-tenant harassment of which the owner knew or should have known. Where a PHA receives a complaint or otherwise learns of possible discriminatory harassment of one resident by another, the PHA is advised to assess the situation and, if necessary, take appropriate corrective action to end the harassment. Issue: Several commenters expressed concern that application of the rule would conflict with HUD's homeless or permanent supportive housing programs or might have a detrimental effect on persons with mental disabilities. A commenter stated that tenants with severe mental health disabilities may create a hostile environment for neighbors and asked HUD to explain what direct responsibility the housing provider has to correct negative behaviors. A commenter stated that the rule incentivizes evictions over efforts to determine whether a reasonable accommodation might be appropriate for persons with mental disabilities. Another commenter stated that because tenants with mental illness often have difficulty finding housing, the proposed rule might result in an increased rate of homelessness among persons with mental disabilities. A commenter asked HUD to revisit the proposed rule's third-party liability provision to avoid harming this particularly vulnerable population. Other commenters stated that the rule would help protect many vulnerable persons from eviction. These commenters supported the statement in the proposed rule's preamble that eviction is only one of the many corrective actions housing providers may utilize to address harassment. HUD Response: The rule neither changes a housing provider's responsibilities toward tenants with mental disabilities nor incentivizes evictions of such persons. It is not uncommon for the behavior of one tenant to frustrate, displease, or annoy another tenant. This is true for behavior by tenants with and without psychiatric disabilities. The rule does not require a housing provider to take action whenever one tenant engages in behavior that another tenant finds objectionable. The Act prohibits discrimination against applicants and tenants with disabilities, including evicting individuals with disabilities because other tenants find them frustrating, displeasing, or annoying. The Act does not, however, require that a dwelling be made available to a person whose tenancy would constitute a direct threat to the health or safety of others or would result in substantial physical damage to the property of others.\38\ The housing provider must make an individualized assessment as to whether such a threat exists based on reliable objective evidence that considers: (1) The nature, duration, and severity of the risk of injury; (2) the probability that injury will actually occur; and (3) whether there are any reasonable accommodations that will eliminate the direct threat. In evaluating a recent history of overt acts, a housing provider must take into account whether the individual has received intervening treatment or medication that has eliminated the direct threat. Reasonable accommodations must be made when they may be necessary to afford such persons an equal opportunity to use and enjoy a dwelling. HUD refers the reader to the Joint Statement of HUD and DOJ on Reasonable Accommodations under the Fair Housing Act for further information.\39\ --------------------------------------------------------------------------- \38\ 42 U.S.C. 3604(f)(9). \39\ See Joint Statement of HUD and DOJ on Reasonable Accommodations Under the Fair Housing Act (May 17, 2004), posted at http://www.hud.gov/offices/fheo/library/huddojstatement.pdf. --------------------------------------------------------------------------- 1. Corrective Action: Sec. 100.7(a)(2) Issue: A commenter asked HUD to remove the prohibition against causing injury to a complaining party. HUD Response: HUD declines to remove the prohibition on causing additional injury to a person who has already been injured by illegal harassment. Permitting such additional injury would be inconsistent with the Act's purposes to prevent unlawful discrimination and remedy discrimination that has already occurred. Issue: One commenter requested further guidance as to what constitutes appropriate corrective action by a housing provider to stop tenant-on-tenant harassment. The commenter specifically inquired whether a single verbal statement by a landlord to a tenant who allegedly engaged in harassing conduct would be sufficient corrective action to relieve a landlord from liability under the rule. Another commenter asked HUD to impose realistic and reasonable limitations on housing providers' obligation to take corrective action. HUD Response: There is no one way that a housing provider must respond to complaints of third-party harassment, [[Page 63071]] although the rule makes clear that a provider that fails to effectively respond may be subject to liability under the Act. Section 100.7(a)(2) provides that corrective actions must be effective in ending the discrimination, but may not injure the aggrieved persons. For example, corrective actions appropriate for a housing provider to utilize to stop tenant-on-tenant harassment or other third-party harassment might include verbal and written warnings; enforcing lease provisions to move, evict, or otherwise sanction tenants who harass or permit guests to harass; issuing no-trespass orders against guests; or reporting conduct to the police. What constitutes appropriate and effective corrective action will depend on the nature, frequency, and severity of the harassment. While in some cases a single verbal reprimand by a housing provider may be sufficient to effectively end discriminatory harassment of one tenant by another, the housing provider should notify the victim that such action was taken, and it is advisable for the housing provider to document this action in its records. Additionally, the housing provider should follow up with the victim of the harassment after the corrective action is taken to ensure that it was effective. If the housing provider knows or should have known that the corrective action was ineffective, the provider has a responsibility to take additional corrective actions within its power. If, however, corrective action is effective in ending the discriminatory conduct, a housing provider is not required to take additional action simply because the victim believes further action should have been taken. HUD does not agree that there is a need to add a specific limitation on a housing provider's responsibility to take corrective action within its power to act in response to discriminatory harassment of which the provider knew or should have known. Issue: A commenter stated that because tenants are not agents or employees, landlords cannot simply compel tenants to take or avoid particular action and do not have the ability to shape or alter tenants' behavior beyond threatening and carrying out evictions. Another commenter asked HUD to consider that there are substantial practical differences between the ability of housing providers to take corrective action to end tenant-on-tenant harassment and their ability to control the actions of their employees because there is no agency relationship in the former. Another commenter stated that most homeowners would be very concerned if association board members, employees, or agents injected themselves into the interpersonal relationships of homeowners and residents to investigate their interactions and relationships for discriminatory elements. This commenter also said that for PHAs, eviction is often unavailable as a remedy for alleged tenant-on-tenant harassment because the U.S. Housing Act of 1937 and federal regulations limit the ability of PHAs to carry out evictions, except for specified causes. In addition, the commenter stated that the result of these restrictions and the proposed rule would be to create significant new liability for PHAs for tenant-on- tenant harassment without creating any new mechanisms for PHAs to mitigate this liability. In contrast, other commenters stated that the rule does not create any new liability because landlords have an obligation to protect tenants' rights to quiet enjoyment and generally have the right to take actions against renters and occupants who disturb the quiet enjoyment of others. HUD Response: Neither the proposed rule nor this final rule create new liability for housing providers, including PHAs or homeowner's associations, regarding resident-on-resident harassment. Nor does the rule require a housing provider to take action that is beyond the scope of its power to act. HUD recognizes that specific remedies that may be available to employers to stop an employee's illegal practices will be distinct from those that a housing provider may use to stop residents who are engaging in discriminatory conduct. Creating and posting policy statements against harassment and establishing complaint procedures, offering fair housing training to residents and mediating disputes before they escalate, issuing verbal and written warnings and notices of rule violations, enforcing bylaws prohibiting illegal or disruptive conduct, issuing and enforcing notices to quit, issuing threats of eviction and, if necessary, enforcing evictions and involving the police are powerful tools available to a housing provider to control or remedy a tenant's illegal conduct. These tools are also available to PHAs, and, contrary to one commenter's concern, eviction is available to a PHA to correct a tenant's discriminatory conduct as the PHA may terminate a tenancy for ``serious or repeated violation of material terms of the lease,'' 24 CFR 966.4(l)(2)(i), which include the obligation that tenants must ``act . . . in a manner which will not disturb other residents' peaceful enjoyment of their accommodations. . . .'' 24 CFR 966.4(f)(11). Issue: A commenter expressed concern that a PHA may be held directly liable for failing to correct actions by third-parties over whom they have little or no control. As an example, the commenter cited harassment of a voucher-holding tenant by neighbors who are not also voucher-holders and not otherwise affiliated with the PHA. Similarly, another commenter stated that the rule could be interpreted to make landlords liable for conduct that occurs off their property or that has nothing to do with a tenant's home. HUD Response: This rule describes the standard for assessing liability under the Fair Housing Act. These fair housing standards apply to private and public landlords alike and do not turn on whether a tenant holds a Housing Choice Voucher or receives other government rental assistance. HUD also reiterates that a housing provider is not responsible for correcting every negative action by any third-party. Rather, the third-party action must constitute a discriminatory housing practice as defined by the Act, and the housing provider must have the power to correct it. As provided in the final rule and discussed elsewhere in this preamble, whether a housing provider has the power to take corrective measures in a specific situation--and what corrective measures are appropriate--is dependent on the facts, including the extent of control or any other legal responsibility the person may have with respect to the conduct of such third-party. There may be instances where the ability to correct the unlawful conduct is beyond a housing provider's control. Thus, when confronted with discriminatory harassment of one of its Housing Choice Voucher-holders or other tenants, the housing agency should explore what corrective actions are within its power and are appropriate to take. Issue: A commenter suggested that an unintended consequence of the proposed rule could be that property owners would remove security devices, such as video cameras and other surveillance mechanisms, for fear that such measures may create a duty on the part of the property owner to correct neighbor-on-neighbor harassment. In contrast, other commenters stated that housing providers may feel the need to provide for more oversight of residences which may interfere with residents' right to peaceful enjoyment of their dwelling. HUD Response: Removing security devices will not relieve a housing provider of its obligation to take the [[Page 63072]] actions within its power to promptly correct and end a discriminatory housing practice. Elsewhere in the preamble, HUD discusses various options that may be available to housing providers to address neighbor- on-neighbor harassment. Issue: A commenter stated that owners should be encouraged to use positive incentives, such as promoting better communication with--and healthy relationships among--tenants, and educating tenants about their rights to prevent harassment, instead of taking corrective actions that may harm tenants, such as ending a lease or evicting a tenant--. HUD Response: HUD agrees that positive incentives are useful tools for preventing harassment. HUD believes, however, that warnings, threats of evictions, evictions, and lease terminations may also be necessary corrective actions to end harassment. The preamble and rule make clear that there is no one way to prevent or correct harassment, only that the methods need to be effective at ending it. c. Vicarious Liability: Sec. 100.7(b) Issue: Several commenters questioned the description of vicarious liability at Sec. 100.7(b) of the proposed rule. One commenter said Sec. 100.7(b) could be interpreted to impose vicarious liability on an organization's directors, officers, or owners and suggested HUD clarify, consistent with Meyer v. Holley, that it is the organization-- not the individual directors, officers, or board members--who are the ``principal or employer'' subject to vicarious liability under the Fair Housing Act. The commenter asked HUD to issue clarification that the proposed regulations do not contravene or attempt to reverse Meyer v. Holley, 537 U.S. 280 (2003). In contrast, other commenters applauded the description of vicarious liability in the rule, stated that the description follows well-established common law tort and agency principles, and expressed support for the proposed rule's reliance on Meyer v. Holley. HUD Response: Subsection 100.7(b) merely describes the well- established concept of vicarious liability, under which principals may be held liable for the discriminatory acts of their agents or employees whether or not they knew of the discriminatory conduct. As articulated in Meyer v. Holley, and as explained in the preambles to the proposed rule and this final rule, traditional agency principles apply to the Fair Housing Act.\40\ Under agency principles, a principal is vicariously liable for the actions of his or her agents taken within the scope of their relationship or employment, or for actions taken outside the scope of their relationship or employment when the agent is aided in the commission of such acts by the existence of the agency relationship.\41\ Determining whether an agency relationship exists is a factual determination that looks to an agent's responsibilities, duties, and functions; whether the discriminatory conduct of the agent was within the scope of the agency relationship or aided by the existence of the agency relationship is also a fact-specific inquiry. --------------------------------------------------------------------------- \40\ 537 U.S. at 282, 287. \41\ See, e.g., Glover v. Jones, 522 F. Supp. 2d 496, 507 (W.D.N.Y. 2007) (holding that ``a property owner may be vicariously liable under the Fair Housing Act for the actions of an employee even when they are outside the scope of employment . . . if the employee was aided in accomplishing the tort by the existence of the agency relation.'') (quoting Mack v. Otis Elevator Co., 326 F. 3d 116, 123 (2d Cir. 2003) (internal quotation marks omitted); see also Boswell v. GumBayTay, No. 2:07-CV-135-WKW[WO], 2009 U.S. Dist. LEXIS 45954, *17 (M.D. Ala. June 1, 2009) (holding that vicarious liability attached to property owner where property manager's ``position essentially gave him unfettered access to communicate with and personally visit [the plaintiff]'' and he ``used his power as property manager as a vehicle through which to perpetrate his unlawful conduct by refusing repairs, raising the rent, and attempting to evict [the plaintiff] as a consequence for [her] refusal to provide sexual favors.''); Glover at 522 F. Supp. 2d at 507 (rejecting defendant property owner's motion for summary judgment on the issue of vicarious liability where evidence showed that property manager used his ``position as the de facto landlord to perpetrate FHA [harassment] violations . . . giving] him the opportunity to visit the apartment when he wanted, and enabl[ing] him to control Plaintiff's rent''); Richards v. Bono, 2005 U.S. Dist. LEXIS 43585 at *30 (holding that wife/co-owner of property could be vicariously liable for husband's harassment where husband acted as her agent and used his position as owner, property manager, and maintenance supervisor to subject plaintiff to sexual harassment by using a key to enter plaintiff's apartment and threatening plaintiff with eviction). --------------------------------------------------------------------------- Issue: Some commenters questioned the statement in the proposed rule's preamble that a principal is vicariously liable for the actions of an agent or employee taken outside the scope of the agency relationship or employment when the agent or employee is aided in the commission of such acts by the existence of the agency relationship. A commenter agreed that a principal is vicariously liable for the acts of its agents committed within the scope of the agency, regardless of knowledge or intent to violate the Act by the principal, but believes that, in adopting the ``aided in agency'' standard, the proposed rule goes beyond traditional tort concepts and does not reflect the limited concepts of vicarious liability endorsed in Meyer v. Holley. The commenter considered it acceptable to hold a real estate company liable for discriminatory acts or statements made by its brokers in the scope of their agency, but disagreed that a housing provider should be liable for misconduct of a janitorial employee outside the scope of that employee's duty because he wore a badged uniform or possessed keys or passes to tenants' dwellings. Another commenter asked for clarity on the reasoning behind the assertion in the preamble to the proposed rule that an agent who harasses residents or applicants is necessarily aided by his or her agency relationship with the housing provider. HUD Response: As discussed throughout this preamble, the proposed and final rule do not create new forms of liability. Instead, HUD has decided to adopt well-established principles of agency law, including that a principal may be vicariously liable for the actions of an agent or employee that are taken outside the scope of the employment or agency relationship if the agent or employee is aided in committing the acts by the existence of the employment or agency relationship. Agency law must be applied to the specific facts at issue to determine whether such a situation exists and gives rise to a principal's liability. The statement in the proposed rule that an agent who engages in hostile environment harassment of residents or applicants is aided by the agency relationship with the housing provider was not intended to suggest the agent is necessarily so aided with respect to every discriminatory housing practice. It was intended to explain one of the reasons HUD chose not to import into the Fair Housing Act the Title VII affirmative defense to an employer's vicarious liability for hostile environment harassment. As explained in that context, a housing provider's agent who engages in harassment holds a position of power and authority over the victimized resident or applicant, regardless of the agent's specific duties. This is because a resident or applicant has only an arms-length economic relationship with the housing provider, while an agent-perpetrator is clothed with the authority of the housing provider. Given this inherent imbalance of power and control over the terms or conditions of the housing environment, the distinction between harassment by supervisory and non-supervisory employees that supported the creation of the affirmative defense in the employment context do not extend to the housing context. D. Other Issues Issue: A commenter stated that HUD should apply the proposed rule only to its own investigative and administrative [[Page 63073]] actions and should not purport to preempt court-established rules. The commenter stated that in some instances it may be appropriate for federal courts to defer to agency rules, but that this is not a case where Chevron \42\ deference is appropriate because HUD is not basing the rule on its own experience, but largely on interpretations of federal court decisions. The commenter stated that HUD has no particular expertise in tort law and no authority to interpret tort laws. Another commenter stated that HUD appears to be using the administrative rule-making process to substitute its views for those of the courts, and that HUD must pursue the change it seeks through Congress and/or the courts. --------------------------------------------------------------------------- \42\ Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). --------------------------------------------------------------------------- HUD Response: The commenters misconstrue both the rule and HUD's authority under the Act. The Act specifically grants the Secretary of HUD the authority and responsibility to administer and enforce the Act, including promulgating rules to carry out the Act.\43\ This rule-making authority is not limited to HUD's investigations or administrative proceedings. Moreover, the rule does not construe tort law, but rather clarifies standards for liability under this part, based on traditional principles of tort liability. It imposes no new legal obligations or duties of care. In addition, the introductory portion of this preamble describes the grounds for Chevron deference. --------------------------------------------------------------------------- \43\ 42 U.S.C. 3608(a), 3610, 3615. --------------------------------------------------------------------------- Issue: Some commenters disagreed with HUD's statement in the preamble to the proposed rule that the rule does not create additional costs for housing providers and others covered by the Fair Housing Act. They stated that the proposed rule would lead to increased costs for and litigation against housing providers. Among the other costs cited by commenters are costs for compliance and training, increased insurance premiums, and increased liability because many housing providers would not have the ability to remain diligent to address all harassment claims, leaving them vulnerable to litigation. Another commenter said that the proposed rule creates the possibility for substantial judgments for money damages that PHAs have little ability to pay, because they may not use federal funds to pay judgments for damages. HUD Response: As noted throughout this preamble, this final rule does not impose any new or enhanced liabilities. Rather, it clarifies existing law under the Fair Housing Act and well-established common law tort and agency principles as they apply under the Act. The rule does not change substantive obligations, but merely formalizes them in a regulation. Because the standards articulated in the rule are already law, the risks of liability and costs of complying will not increase with issuance of the rule. HUD presumes that the vast majority of housing providers are in compliance with the law. Any costs incurred by housing providers to come into compliance as a result of this rulemaking will simply be the costs of compliance with a preexisting statute, administrative practice, and case law. In fact, by formalizing uniform standards for investigations and adjudications under the Fair Housing Act, the rule serves to reduce costs for housing providers by establishing greater clarity with respect to how a determination of liability is to be made. V. Findings and Certifications Regulatory Review--Executive Orders 12866 and 13563 Under Executive Order 12866 (Regulatory Planning and Review), a determination must be made whether a regulatory action is significant and therefore, subject to review by the Office of Management and Budget (OMB) in accordance with the requirements of the order. Executive Order 13563 (Improving Regulations and Regulatory Review) directs executive agencies to analyze regulations that are ``outmoded, ineffective, insufficient, or excessively burdensome, and to modify, streamline, expand, or repeal them in accordance with what has been learned.'' Executive Order 13563 also directs that, where relevant, feasible, and consistent with regulatory objectives, and to the extent permitted by law, agencies are to identify and consider regulatory approaches that reduce burdens and maintain flexibility and freedom of choice for the public. This rule was determined to be a ``significant regulatory action'' as defined in section 3(f) of Executive Order (although not an economically significant regulatory action, as provided under section 3(f)(1) of the Executive Order). This rule establishes uniform standards for use in investigations and processing cases involving harassment and liability under the Fair Housing Act. In establishing such standards, HUD is exercising its rulemaking authority to bring uniformity, clarity, and certainty to an area of legal practice. The docket file for this rule is available for public inspection between the hours of 8 a.m. and 5 p.m. weekdays in the Regulations Division, Office of General Counsel, Department of Housing and Urban Development, Room 10276, 451 7th Street SW., Washington, DC 20410-0500. Due to security measures at the HUD Headquarters building, please schedule an appointment to review the docket file by calling the Regulations Division at 202-708-3055 (this is not a toll-free number). Persons with hearing or speech impairments may access the above telephone number via TTY by calling the toll-free Federal Relay Service at 800-877-8339. Environmental Impact This rule does not direct, provide for assistance or loan and mortgage insurance for, or otherwise govern or regulate, real property acquisition, disposition, leasing, rehabilitation, alteration, demolition or new construction, or establish, revise, or provide for standards for construction or construction materials, manufactured housing, or occupancy. This rule is limited to the procedures governing fair housing enforcement. Accordingly, under 24 CFR 50.19(c)(3), this rule is categorically excluded from environmental review under the National Environmental Policy Act (42 U.S.C. 4321). Regulatory Flexibility Act The Regulatory Flexibility Act (5 U.S.C. 4321, et seq.) generally requires an agency to conduct a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements, unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. The rule establishes standards for evaluating claims of harassment and liability under the Fair Housing Act. The scope of the rule is procedural, and the regulatory changes do not establish any substantive regulatory burdens on small entities. Accordingly, the undersigned certifies that this rule will not have a significant economic impact on a substantial number of small entities. Unfunded Mandates Reform Act Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) (UMRA) establishes requirements for federal agencies to assess the effects of their regulatory actions on state, local, and tribal governments and the private sector. This rule does not impose any federal mandates on any state, local, or tribal governments or the private sector within the meaning of UMRA. [[Page 63074]] Executive Order 13132, Federalism Executive Order 13132 (entitled ``Federalism'') prohibits an agency from publishing any rule that has federalism implications if the rule either (1) imposes substantial, direct compliance costs on state and local governments, and is not required by statute, or (2) preempts state law, unless the agency meets the consultation and funding requirements of section 6 of the Executive Order. This rule does not have federalism implications and does not impose substantial direct compliance costs on state and local governments or preempt state law within the meaning of the Executive Order. Catalogue of Federal Domestic Assistance The Catalogue of Federal Domestic Assistance Number for the equal opportunity in housing program is 14.400. List of Subjects in 24 CFR Part 100 Aged, Fair housing, Individuals with disabilities, Mortgages, Reporting and recordkeeping requirements. Accordingly, for the reasons stated in the preamble, and in accordance with HUD's authority in 42 U.S.C. 3535(d), HUD amends 24 CFR part 100 as follows: PART 100--DISCRIMINATORY CONDUCT UNDER THE FAIR HOUSING ACT 0 1. The authority citation for 24 CFR part 100 continues to read as follows: Authority: 42 U.S.C. 3535(d), 3600-3620. 0 2. Add Sec. 100.7 to read as follows: Sec. 100.7 Liability for discriminatory housing practices. (a) Direct liability. (1) A person is directly liable for: (i) The person's own conduct that results in a discriminatory housing practice. (ii) Failing to take prompt action to correct and end a discriminatory housing practice by that person's employee or agent, where the person knew or should have known of the discriminatory conduct. (iii) Failing to take prompt action to correct and end a discriminatory housing practice by a third-party, where the person knew or should have known of the discriminatory conduct and had the power to correct it. The power to take prompt action to correct and end a discriminatory housing practice by a third-party depends upon the extent of the person's control or any other legal responsibility the person may have with respect to the conduct of such third-party. (2) For purposes of determining liability under paragraphs (a)(1)(ii) and (iii) of this section, prompt action to correct and end the discriminatory housing practice may not include any action that penalizes or harms the aggrieved person, such as eviction of the aggrieved person. (b) Vicarious liability. A person is vicariously liable for a discriminatory housing practice by the person's agent or employee, regardless of whether the person knew or should have known of the conduct that resulted in a discriminatory housing practice, consistent with agency law. 0 3. In Sec. 100.60, add paragraphs (b)(6) and (7) to read as follows: Sec. 100.60 Unlawful refusal to sell or rent or to negotiate for the sale or rental. * * * * * (b) * * * (6) Conditioning the availability of a dwelling, including the price, qualification criteria, or standards or procedures for securing the dwelling, on a person's response to harassment because of race, color, religion, sex, handicap, familial status, or national origin. (7) Subjecting a person to harassment because of race, color, religion, sex, handicap, familial status, or national origin that causes the person to vacate a dwelling or abandon efforts to secure the dwelling. 0 4. In Sec. 100.65, add paragraphs (b)(6) and (7) to read as follows: Sec. 100.65 Discrimination in terms, conditions and privileges and in services and facilities. * * * * * (b) * * * (6) Conditioning the terms, conditions, or privileges relating to the sale or rental of a dwelling, or denying or limiting the services or facilities in connection therewith, on a person's response to harassment because of race, color, religion, sex, handicap, familial status, or national origin. (7) Subjecting a person to harassment because of race, color, religion, sex, handicap, familial status, or national origin that has the effect of imposing different terms, conditions, or privileges relating to the sale or rental of a dwelling or denying or limiting services or facilities in connection with the sale or rental of a dwelling. 0 5. In Sec. 100.80, add paragraph (b)(6) to read as follows: Sec. 100.80 Discriminatory representation on the availability of dwellings. * * * * * (b) * * * (6) Representing to an applicant that a unit is unavailable because of the applicant's response to a request for a sexual favor or other harassment because of race, color, religion, sex, handicap, familial status, or national origin. 0 6. In Sec. 100.90, add paragraphs (b)(5) and (6) to read as follows: Sec. 100.90 Discrimination in the provision of brokerage services. * * * * * (b) * * * (5) Conditioning access to brokerage services on a person's response to harassment because of race, color, religion, sex, handicap, familial status, or national origin. (6) Subjecting a person to harassment because of race, color, religion, sex, handicap, familial status, or national origin that has the effect of discouraging or denying access to brokerage services. 0 7. In Sec. 100.120, add paragraphs (b)(3) and (4) to read as follows: Sec. 100.120 Discrimination in the making of loans and in the provision of other financial assistance. * * * * * (b) * * * (3) Conditioning the availability of a loan or other financial assistance on a person's response to harassment because of race, color, religion, sex, handicap, familial status, or national origin. (4) Subjecting a person to harassment because of race, color, religion, sex, handicap, familial status, or national origin that affects the availability of a loan or other financial assistance. 0 8. In Sec. 100.130, add paragraphs (b)(4) and (5) to read as follows: Sec. 100.130 Discrimination in the terms and conditions for making available loans or other financial assistance. * * * * * (b) * * * (4) Conditioning an aspect of a loan or other financial assistance to be provided with respect to a dwelling, or the terms or conditions thereof, on a person's response to harassment because of race, color, religion, sex, handicap, familial status, or national origin. (5) Subjecting a person to harassment because of race, color, religion, sex, handicap, familial status, or national origin that has the effect of imposing different terms or conditions for the availability of such loans or other financial assistance. [[Page 63075]] 0 9. In Sec. 100.135, revise paragraph (d) to read as follows: Sec. 100.135 Unlawful practices in the selling, brokering, or appraising of residential real property. * * * * * (d) Practices which are unlawful under this section include, but are not limited to: (1) Using an appraisal of residential real property in connection with the sale, rental, or financing of any dwelling where the person knows or reasonably should know that the appraisal improperly takes into consideration race, color, religion, sex, handicap, familial status, or national origin. (2) Conditioning the terms of an appraisal of residential real property in connection with the sale, rental, or financing of a dwelling on a person's response to harassment because of race, color, religion, sex, handicap, familial status, or national origin. 0 10. In Sec. 100.400, add paragraph (c)(6) to read as follows: Sec. 100.400 Prohibited interference, coercion or intimidation. * * * * * (c) * * * (6) Retaliating against any person because that person reported a discriminatory housing practice to a housing provider or other authority. 0 11. Add subpart H, consisting of Sec. 100.600, to read as follows: Subpart H-- Quid Pro Quo and Hostile Environment Harassment Sec. 100.600 Quid pro quo and hostile environment harassment. (a) General. Quid pro quo and hostile environment harassment because of race, color, religion, sex, familial status, national origin or handicap may violate sections 804, 805, 806 or 818 of the Act, depending on the conduct. The same conduct may violate one or more of these provisions. (1) Quid pro quo harassment. Quid pro quo harassment refers to an unwelcome request or demand to engage in conduct where submission to the request or demand, either explicitly or implicitly, is made a condition related to: The sale, rental or availability of a dwelling; the terms, conditions, or privileges of the sale or rental, or the provision of services or facilities in connection therewith; or the availability, terms, or conditions of a residential real estate-related transaction. An unwelcome request or demand may constitute quid pro quo harassment even if a person acquiesces in the unwelcome request or demand. (2) Hostile environment harassment. Hostile environment harassment refers to unwelcome conduct that is sufficiently severe or pervasive as to interfere with: The availability, sale, rental, or use or enjoyment of a dwelling; the terms, conditions, or privileges of the sale or rental, or the provision or enjoyment of services or facilities in connection therewith; or the availability, terms, or conditions of a residential real estate-related transaction. Hostile environment harassment does not require a change in the economic benefits, terms, or conditions of the dwelling or housing-related services or facilities, or of the residential real-estate transaction. (i) Totality of the circumstances. Whether hostile environment harassment exists depends upon the totality of the circumstances. (A) Factors to be considered to determine whether hostile environment harassment exists include, but are not limited to, the nature of the conduct, the context in which the incident(s) occurred, the severity, scope, frequency, duration, and location of the conduct, and the relationships of the persons involved. (B) Neither psychological nor physical harm must be demonstrated to prove that a hostile environment exists. Evidence of psychological or physical harm may, however, be relevant in determining whether a hostile environment existed and, if so, the amount of damages to which an aggrieved person may be entitled. (C) Whether unwelcome conduct is sufficiently severe or pervasive as to create a hostile environment is evaluated from the perspective of a reasonable person in the aggrieved person's position. (ii) Title VII affirmative defense. The affirmative defense to an employer's vicarious liability for hostile environment harassment by a supervisor under Title VII of the Civil Rights Act of 1964 does not apply to cases brought pursuant to the Fair Housing Act. (b) Type of conduct. Harassment can be written, verbal, or other conduct, and does not require physical contact. (c) Number of incidents. A single incident of harassment because of race, color, religion, sex, familial status, national origin, or handicap may constitute a discriminatory housing practice, where the incident is sufficiently severe to create a hostile environment, or evidences a quid pro quo. Dated: August 18, 2016. Gustavo Velasquez, Assistant Secretary for Fair Housing and Equal Opportunity. [FR Doc. 2016-21868 Filed 9-13-16; 8:45 am] BILLING CODE 4210-67-P
![63054 Federal Register / Vol. 81, No. 178 / Wednesday, September 14, 2016 / Rules and Regulations
The Agency has determined under 21 Dated: September 6, 2016. I. Executive Summary
CFR 25.33(a) that this action is William T. Flynn,
A. Purpose of the Regulatory Action
categorically excluded from the Acting Director, Center for Veterinary
requirement to submit an environmental Medicine. Both HUD and the courts have long
assessment or an environmental impact [FR Doc. 2016–21985 Filed 9–13–16; 8:45 am] recognized that Title VIII of the Civil
statement because it is of a type that BILLING CODE 4164–01–P
Rights Act of 1968, as amended, (42
does not individually or cumulatively U.S.C. 3601 et seq.) (Fair Housing Act or
have a significant effect on the human Act) prohibits harassment in housing
environment. and housing-related transactions
DEPARTMENT OF HOUSING AND because of race, color, religion, sex,
Elsewhere in this issue of the Federal
URBAN DEVELOPMENT national origin, disability,1 and familial
Register, FDA gave notice that the status, just as Title VII of the Civil
approval of those parts of NADA 138– 24 CFR Part 100 Rights Act of 1964 (42 U.S.C. 2000e et
934 pertaining to the procaine penicillin seq.) (Title VII) prohibits such
component indications for growth [Docket No. FR–5248–F–02] harassment in employment. But no
promotion and increased feed efficiency standards had been formalized for
in swine is withdrawn, effective RIN 2529–AA94 assessing claims of harassment under
September 14, 2016. As provided for in the Fair Housing Act. Courts have often
the regulatory text of this document, the Quid Pro Quo and Hostile Environment
Harassment and Liability for applied standards first adopted under
animal drug regulations are amended to Title VII to evaluate claims of
reflect this partial withdrawal of Discriminatory Housing Practices
Under the Fair Housing Act harassment under the Fair Housing Act,
approval and subsequent product but there are differences between the
reformulation. AGENCY: Office of the Assistant Fair Housing Act and Title VII, and
NADA 138–934 was identified as Secretary for Fair Housing and Equal between harassment in the workplace
being affected by guidance for industry Opportunity, HUD. and harassment in or around one’s
(GFI) #213 ‘‘New Animal Drugs and ACTION: Final rule. home, that warrant this rulemaking.
New Animal Drug Combination This rule formalizes standards for
Products Administered in or on SUMMARY: This final rule amends HUD’s evaluating claims of quid pro quo and
Medicated Feed or Drinking Water of fair housing regulations to formalize hostile environment harassment in the
Food-Producing Animals: standards for use in investigations and housing context. The rule does so by
Recommendations for Drug Sponsors for adjudications involving allegations of defining ‘‘quid pro quo harassment’’ and
Voluntarily Aligning Product Use harassment on the basis of race, color, ‘‘hostile environment harassment’’ as
Conditions with GFI #209,’’ December religion, national origin, sex, familial conduct prohibited under the Fair
2013. status, or disability. The rule specifies Housing Act, and by specifying the
This rule does not meet the definition how HUD will evaluate complaints of standards to be used to evaluate
of ‘‘rule’’ in 5 U.S.C. 804(3)(A) because quid pro quo (‘‘this for that’’) whether particular conduct creates a
it is a rule of ‘‘particular applicability.’’ harassment and hostile environment quid pro quo or hostile environment in
Therefore, it is not subject to the harassment under the Fair Housing Act. violation of the Act. Such standards will
It will also provide for uniform apply both in administrative
congressional review requirements in 5
treatment of Fair Housing Act claims adjudications and in cases brought in
U.S.C. 801–808.
raising allegations of quid pro quo and federal and state courts under the Fair
List of Subjects in 21 CFR Part 558 hostile environment harassment in Housing Act. This rule also adds to
judicial and administrative forums. This HUD’s existing Fair Housing Act
Animal drugs, Animal feeds. regulations illustrations of
rule defines ‘‘quid pro quo’’ and
Therefore, under the Federal Food, ‘‘hostile environment harassment,’’ as discriminatory housing practices that
Drug, and Cosmetic Act and under prohibited under the Fair Housing Act, may constitute illegal quid pro quo and
authority delegated to the Commissioner and provides illustrations of hostile environment harassment.
of Food and Drugs and redelegated to discriminatory housing practices that By establishing consistent standards
the Director of the Center for Veterinary constitute such harassment. In addition, for evaluating claims of quid pro quo
Medicine, 21 CFR part 558 is amended this rule clarifies the operation of and hostile environment harassment,
as follows: traditional principles of direct and this rule provides guidance to providers
vicarious liability in the Fair Housing of housing or housing-related services
PART 558—NEW ANIMAL DRUGS FOR Act context. seeking to ensure that their properties or
USE IN ANIMAL FEEDS businesses are free of unlawful
DATES: Effective date: October 14, 2016. harassment. The rule also provides
FOR FURTHER INFORMATION CONTACT: clarity to victims of harassment and
■ 1. The authority citation for part 558
Lynn Grosso, Acting Deputy Assistant their representatives regarding how to
continues to read as follows:
Secretary for Enforcement and assess potential claims of illegal
Authority: 21 U.S.C. 354, 360b, 360ccc, Programs, Office of Fair Housing and harassment under the Fair Housing Act.
360ccc–1, 371. Equal Opportunity, Department of In addition, this final rule clarifies
§ 558.140 [Amended] Housing and Urban Development, 451 when housing providers and other
asabaliauskas on DSK3SPTVN1PROD with RULES
7th Street SW., Room 5204, Washington entities or individuals covered by the
■ 2. In § 558.140, in paragraph (b)(2), DC 20410–2000; telephone number 202– Fair Housing Act may be held directly
remove ‘‘No. 054771’’ and in its place 402–5361 (this is not a toll-free or vicariously liable under the Act for
add ‘‘Nos. 054771 and 069254’’. number). Persons with hearing or
speech impairments may contact this 1 This rule uses the term ‘‘disability’’ to refer to
§ 558.145 [Amended] what the Fair Housing Act and its implementing
number via TTY by calling the toll-free
regulations refer to as ‘‘handicap.’’ Both terms have
■ 3. In § 558.145, remove and reserve Federal Relay Service at 800–877–8339. the same legal meaning. See Bragdon v. Abbott, 524
paragraph (a)(2). SUPPLEMENTARY INFORMATION: U.S. 624, 631 (1998).
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![Federal Register / Vol. 81, No. 178 / Wednesday, September 14, 2016 / Rules and Regulations 63055
illegal harassment, as well as for other and others engaged in housing quid pro quo or hostile environment
discriminatory housing practices that transactions. harassment prohibited by the Act. The
violate the Act. This rule sets forth how The benefits of the rule are that it will 1989 regulations also do not discuss
these traditional liability standards assist in ensuring compliance with the liability standards for prohibited
apply in the housing context because, in Fair Housing Act by defining quid pro harassment or other discriminatory
HUD’s experience, there has been quo and hostile environment housing practices.
significant misunderstanding among harassment that violates the Act and by Over time, forms of harassment that
public and private housing providers as specifying traditional principles of violate civil rights laws have coalesced
to the circumstances under which they direct and vicarious liability, consistent into two legal doctrines—quid pro quo
will be subject to liability under the Fair with Supreme Court precedent. and hostile environment. Although
Housing Act for discriminatory housing Articulating clear standards enables HUD and the courts have recognized
practices undertaken by others. entities subject to the Fair Housing Act’s that the Fair Housing Act prohibits
prohibitions and persons protected by harassment because of race or color,2
B. Legal Authority for the Regulation its terms to understand the types of disability,3 religion,4 national origin,5
The legal authority for this regulation conduct that constitute actionable quid familial status,6 and sex,7 the doctrines
is found in the Fair Housing Act, which pro quo and hostile environment of quid pro quo and hostile environment
gives the Secretary of HUD the harassment. As a result, HUD expects harassment are not well developed
‘‘authority and responsibility for this rule to facilitate more effective under the Fair Housing Act.
administering this Act.’’ 42 U.S.C. training to avoid discriminatory As a result, when deciding
3608(a). In addition, the Act provides harassment in housing and decrease the harassment cases under the Fair
that ‘‘[t]he Secretary may make rules need for protracted litigation to resolve Housing Act, courts have often looked
(including rules for the collection, disputed claims. to case law decided under Title VII,
maintenance, and analysis of which prohibits employment
II. Background discrimination because of race, color,
appropriate data) to carry out this title.
Title VIII of the Civil Rights Act of religion, sex, and national origin.8 But
The Secretary shall give public notice
1968, as amended (the Fair Housing Act the home and the workplace are
and opportunity for comment with
or Act), prohibits discrimination in the significantly different environments
respect to all rules made under this
availability and enjoyment of housing such that strict reliance on Title VII case
section.’’ 42 U.S.C. 3614a. HUD also has
and housing-related services, facilities, law is not always appropriate. One’s
general rulemaking authority under the
and transactions because of race, color, home is a place of privacy, security, and
Department of Housing and Urban
national origin, religion, sex, disability, refuge (or should be), and harassment
Development Act to make such rules
and familial status. 42 U.S.C. 3601–19. that occurs in or around one’s home can
and regulations as may be necessary to
The Act prohibits a wide range of be far more intrusive, violative and
carry out its functions, powers and
discriminatory housing and housing- threatening than harassment in the more
duties. See 42 U.S.C. 3535(d). related practices, including, among public environment of one’s work
C. Summary of Major Provisions other things, making discriminatory place.9 Consistent with this reality, the
statements, refusing to rent or sell,
The major provisions of this rule: denying access to services, setting 2 See, e.g., Smith v. Mission Assoc. Ltd. P’ship,
• Formalize definitions of ‘‘quid pro different terms or conditions, refusing to 225 F. Supp. 2d 1293, 1298–99 (D. Kan. 2002) (42
quo harassment’’ and ‘‘hostile make reasonable modifications or U.S.C. 3604(b)); HUD v. Tucker, 2002 ALJ LEXIS 33,
environment harassment’’ under the *3–4 (HUD ALJ 2002) (42 U.S.C. 3604(a) and (b)).
accommodations, discriminating in 3 See, e.g., Neudecker v. Boisclair Corp., 351 F. 3d
Fair Housing Act. residential real estate-related 361, 364 (8th Cir. 2003) (42 U.S.C. 3604(f)(2)).
• Formalize standards for evaluating transactions, and retaliating. See 42 4 See, e.g., Bloch v. Frischholz, 587 F. 3d 771, 787
claims of quid pro quo and hostile U.S.C. 3604, 3605, 3606 and 3617. (7th Cir. 2009) (42 U.S.C. 3604(b), 3617).
environment harassment under the Fair In 1989, HUD promulgated fair 5 See, e.g., Effendi v. Amber Fields Homeowners
Housing Act. Assoc., 2011 U.S. Dist. Lexis 35265, *1 (N.D. Ill.
housing regulations at 24 CFR part 100 2011) (42 U.S.C. 3604(b) and 3617); Texas v. Crest
• Add illustrations of prohibited quid that address discriminatory conduct in Asset Mgmt., 85 F. Supp. 722, 736 (S.D. TX 2000)
pro quo and hostile environment housing generally. The 1989 regulations (42 U.S.C. 3604(a) and (b), 3617).
harassment to HUD’s existing Fair include examples of discriminatory 6 See, e.g., Bischoff v. Brittain, 2014 U.S. Dist.
Housing Act regulations. housing practices that cover quid pro LEXIS 145945, *13–14, *17 (E.D. Cal. 2014)
(3604(b)); United States v. M. Westland Co., 1995
• Identify traditional principles of quo sexual harassment and hostile U.S. Dist. LEXIS 22466, *4 (C.D. Cal. 1995) (Fair
direct and vicarious liability applicable environment harassment generally. Housing Act provision not specified).
to all discriminatory housing practices Section 100.65(b)(5) identifies, as an 7 See, e.g., Quigley v. Winter, 598 F. 3d 938, 946
under the Fair Housing Act, including example of unlawful conduct, denying (8th Cir. 2010) (42 U.S.C. 804(b), 3617); Krueger v.
Cuomo, 115 F. 3d 487, 491 (7th Cir. 1997) (42
quid pro quo and hostile environment or limiting housing-related services or U.S.C. 3604(b), 3617); Honce v. Vigil, 1 F. 3d 1085,
harassment. facilities because a person refused to 1088 (10th Cir. 1993) (42 U.S.C. 3604(b));
Please refer to section III of this provide sexual favors. Section Shellhammer v. Lewallen, 770 F. 2d 167 (6th Cir.
preamble, entitled ‘‘This Final Rule,’’ 100.400(c)(2) offers as an example of 1985) (sexual harassment under the Fair Housing
Act in general).
for a discussion of the changes made to illegal conduct ‘‘. . . interfering with 8 See, e.g., Honce v. Vigil, 1 F. 3d at 1088;
HUD’s regulations by this final rule. persons in their enjoyment of a dwelling Shellhammer v. Lewallen, 770 F. 2d 167; Glover v.
because of race, color, religion, sex, Jones, 522 F. Supp. 2d 496, 503 (W.D.N.Y. 2007);
D. Costs and Benefits
asabaliauskas on DSK3SPTVN1PROD with RULES
handicap, familial status, or national Beliveau v. Caras, 873 F. Supp. 1393, 1396 (C.D.
Cal. 1995); see also Neudecker v. Boisclair Corp.,
This rule formalizes clear, consistent, origin of such persons, or of visitors or 351 F. 3d at 364 (applying Title VII concepts to find
nationwide standards for evaluating associates of such persons.’’ The 1989 hostile environment based on disability violated
harassment claims under the Fair regulations do not, however, expressly Act). Unlike Title VII, the Act also includes
Housing Act. The rule does not create define quid pro quo or hostile disability and familial status among its protected
characteristics.
any new forms of liability under the Fair environment harassment, specify 9 See, e.g., Quigley v. Winter, 598 F. 3d at 947
Housing Act and thus adds no standards for examining such claims, or (emphasizing that defendant’s harassing conduct
additional costs for housing providers provide illustrations of other types of Continued
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![63056 Federal Register / Vol. 81, No. 178 / Wednesday, September 14, 2016 / Rules and Regulations
Supreme Court has recognized that or hostile environment. It is not, including quid pro quo or hostile
individuals have heightened however, limited to quid pro quo or environment harassment.
expectations of privacy within the hostile environment claims and could • Adds to § 100.600(a)(2)(i), ‘‘Totality
home.10 be violated by other conduct that of the circumstances,’’ a new paragraph
This rule therefore formalizes constitutes retaliation or another form of (C) that explains the reasonable person
standards to address harassment in and coercion, intimidation, threats, or standard under which hostile
around one’s home and identifies some interference because of a protected environment harassment is assessed
of the differences between harassment characteristic. In sum, this rule provides ‘‘Whether unwelcome conduct is
in the home and harassment in the standards that are uniformly applicable sufficiently severe or pervasive as to
workplace. While Title VII and Fair to claims of quid pro quo and hostile create a hostile environment is
Housing Act case law contain many environment harassment under the Fair evaluated from the perspective of a
similar concepts, this regulation Housing Act, regardless of the section of reasonable person in the aggrieved
describes the appropriate analytical the Act that is alleged to have been person’s position.’’
framework for harassment claims under violated, and the same discriminatory
the Fair Housing Act. conduct could violate more than one • Re-words proposed
The rule addresses only quid pro quo provision of the Act whether or not it § 100.600(a)(2)(i)(B) to clarify that proof
and hostile environment harassment, also constitutes quid pro quo or hostile of hostile environment would not
and not conduct generically referred to environment harassment. require demonstrating psychological or
as harassment that, for different reasons, physical harm to avoid any confusion
may violate section 818 or other III. Changes Made at the Final Rule on that point. Proposed
provisions of the Fair Housing Act. For Stage § 100.600(a)(2)(i)(B) stated ‘‘Evidence of
example, a racially hostile statement by A. Overview of Changes Made at the psychological or physical harm is
a housing provider could indicate a Final Rule Stage relevant in determining whether a
discriminatory preference in violation of hostile environment was created, as
section 804(c) of the Act, or it could In response to public comment and well as the amount of damages to which
evidence intent to deny housing or upon further consideration by HUD of an aggrieved person may be entitled.
discriminate in the terms or conditions the issues presented in this rulemaking, Neither psychological nor physical
of housing in violation of sections HUD makes the following changes at harm, however, must be demonstrated
804(a) or 804(b), even if the statement this final rule stage: to prove that a hostile environment
does not create a hostile environment or • Re-words proposed § 100.7(a)(1)(iii) exists.’’ Section 100.600(a)(2)(i)(B) in
establish a quid pro quo. Section 818, to avoid confusing the substantive this final rule provides: ‘‘Neither
which makes it unlawful to ‘‘coerce, obligation to comply with the Fair psychological nor physical harm must
intimidate, threaten, or interfere with Housing Act with the standard of be demonstrated to prove that a hostile
any person in the exercise or enjoyment liability for discriminatory third-party environment exists. Evidence of
of’’ rights protected by the Act, or on conduct. Proposed § 100.7(a)(1)(iii) psychological or physical harm may,
account of a person having aided others stated that a person is directly liable for however, be relevant in determining
in exercising or enjoying rights ‘‘failing to fulfill a duty to take prompt whether a hostile environment existed
protected by the Act, could be violated action to correct and end a and, if so, the amount of damages to
by conduct that creates a quid pro quo discriminatory housing practice by a which an aggrieved person may be
third-party, where the person knew or entitled.’’
was made ‘‘even more egregious’’ by the fact that should have known of the
it occurred in plaintiff’s home, ‘‘a place where [she] discriminatory conduct. The duty to • Re-words proposed § 100.600(c) to
was entitled to feel safe and secure and need not take prompt action to correct and end a clarify that a single incident may
flee.’’); Salisbury v. Hickman, 974 F. Supp. 2d 1282,
discriminatory housing practice by a constitute either quid pro quo or hostile
1292 (E.D. Cal. 2013) (‘‘[c]ourts have recognized environment harassment if the incident
that harassment in one’s own home is particularly third-party derives from an obligation to
egregious and is a factor that must be considered the aggrieved person created by contract meets the standard for either type of
in determining the seriousness of the alleged or lease (including bylaws or other rules harassment under § 100.600(a)(1) or
harassment’’); Williams v. Poretsky Management,
of a homeowner’s association, (a)(2). Proposed § 100.600(c) provided
955 F. Supp. 490, 498 (D. Md. 1996) (noting sexual
harassment in the home more severe than in condominium or cooperative), or by ‘‘A single incident of harassment
workplace); Beliveau v. Caras, 873 F. Supp. at 1398 federal, state or local law.’’ Section because of race, color, religion, sex,
(describing home as place where one should be safe
100.7(a)(1)(iii) of this final rule provides familial status, national origin, or
and not vulnerable to sexual harassment); D. handicap may constitute a
Benjamin Barros, Home As a Legal Concept, 46 that a person is directly liable for
Santa Clara L. Rev. 255, 277–82 (2006) (discussing ‘‘failing to take prompt action to correct discriminatory housing practice, where
legal concept of home as source of security, liberty and end a discriminatory housing the incident is severe, or evidences a
and privacy which justifies favored legal status in
practice by a third-party, where the quid pro quo.’’ Section 100.600(c) in
many circumstances); Nicole A. Forkenbrock this final rule provides ‘‘A single
Lindemyer, Article, Sexual Harassment on the person knew or should have known of
Second Shift: The Misfit Application of Title VII the discriminatory conduct and had the incident of harassment because of race,
Employment Standards to Title VIII Housing Cases, power to correct it. The power to take color, religion, sex, familial status,
18 Law & Ineq. 351, 368–80 (2000) (noting that
prompt action to correct a national origin, or handicap may
transporting of Title VII workplace standards for constitute a discriminatory housing
sexual harassment into Fair Housing Act cases of discriminatory housing practice by a
residential sexual harassment ignores important third-party depends upon the extent of practice, where the incident is
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distinctions between the two settings); Michelle control or any other legal responsibility sufficiently severe to create a hostile
Adams, Knowing Your Place: Theorizing Sexual
the person may have with respect to the environment, or evidences a quid pro
Harassment at Home, 40 Ariz. L. Rev. 17, 21–28 quo.’’
(1998) (describing destabilizing effect of sexual conduct of such third-party.’’
harassment in the home). • Adds to § 100.400 a new paragraph • Corrects the illustration in proposed
10 See, e.g. Frisby v. Schultz, 487 U.S. 474, 484
(c)(6) specifying as an example of a § 100.65(b)(7) to fix a typographical
(1988) (‘‘[w]e have repeatedly held that individuals
are not required to welcome unwanted speech into
discriminatory housing practice error in the proposed rule. In the final
their own homes and that the government may retaliation because a person reported a rule, the word ‘‘service’’ is corrected
protect this freedom’’). discriminatory housing practice, and made plural.
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![63058 Federal Register / Vol. 81, No. 178 / Wednesday, September 14, 2016 / Rules and Regulations
aided or encouraged another person in because of gender identity. In 2012, the theory. Over the past two decades, an
the exercise or enjoyment of any right Equal Employment Opportunity increasing number of Federal courts,
granted or protected by sections 803– Commission (EEOC) reached the same building on the Price Waterhouse
806 of the Act. To highlight the essential conclusion, ‘‘clarifying that claims of rationale, have found protections under
role whistleblower protection plays in discrimination based on transgender Title VII for those asserting
ensuring fair housing, HUD is adding to status, also referred to as claims of discrimination claims related to their
§ 100.400 a new paragraph (c)(6), which discrimination based on gender identity, sexual orientation.15 Many Federal-
provides the following example of a are cognizable under Title VII’s sex sector EEOC decisions have found the
discriminatory housing practice discrimination prohibition.’’ 12 same.16 Although some Federal
‘‘Retaliating against any person because Following the EEOC’s decision, the
that person reported a discriminatory Attorney General also concluded that: 15 See, e.g., Prowel v. Wise Bus. Forms, Inc., 579
housing practice to a housing provider F.3d 285, 291–92 (3rd Cir. 2009) (harassment of a
the best reading of Title VII’s prohibition of plaintiff because of his ‘‘effeminate traits’’ and
or other authority.’’ sex discrimination is that it encompasses behaviors could constitute sufficient evidence that
Issue: Several commenters urged HUD discrimination based on gender identity, he ‘‘was harassed because he did not conform to
to state in the final rule that harassment including transgender status. The most [the employer’s] vision of how a man should look,
against persons who are lesbian, gay, straightforward reading of Title VII is that speak, and act—rather than harassment based solely
discrimination ‘‘because of . . . sex’’ on his sexual orientation’’); Nichols v. Azteca Rest.
bisexual, or transgender (LGBT), or Enter., Inc., 256 F.3d 864, 874–75 (9th Cir. 2001)
because of pregnancy, violates the Fair includes discrimination because an
(coworkers’ and supervisors’ harassment of a gay
employee’s gender identification is as a
Housing Act. They asked HUD to define male because he did not conform to gender norms
member of a particular sex, or because the created a hostile work environment in violation of
harassment because of sex to include employee is transitioning, or has Title VII); Hall v. BNSF Ry. Co., No. C13–2160 RSM,
harassment based on sexual orientation, transitioned, to another sex.13 2014 U.S. Dist. LEXIS 132878 *8–9 (W.D. Wash.
gender identity, sex stereotyping, or September 22, 2014) (plaintiff’s allegation that ‘‘he
pregnancy. The commenters referenced HUD reaffirms its view that under the (as a male who married a male) was treated
studies about the pervasive harassment Fair Housing Act, discrimination based differently in comparison to his female coworkers
and discrimination such persons face in on gender identity is sex discrimination. who also married males’’ stated a sex
Accordingly, quid pro quo or hostile discrimination claim under Title VII); Terveer v.
housing. They also noted that a number Billington, 34 F. Supp. 3d 100, 116 (D.D.C. 2014)
of federal courts and federal agencies environment harassment in housing (Title VII claim based on sex stated when plaintiff’s
have interpreted Title VII and other because of a person’s gender identity is ‘‘orientation as homosexual’’ removed him from the
laws prohibiting discrimination because indistinguishable from harassment employer’s preconceived definition of male); Heller
because of sex.14 v. Columbia Edgewater Country Club, 195 F. Supp.
of sex to include discrimination on the 2d 1212, 1224 (D. Or. 2002) (‘‘[A] jury could find
HUD, in its 2010 memorandum, also
basis of gender identity, gender that Cagle repeatedly harassed (and ultimately
advised that claims of housing discharged) Heller because Heller did not conform
transition, or transgender status. The
discrimination because of sexual to Cagle’s stereotype of how a woman ought to
commenters also pointed to HUD’s
orientation can be investigated under behave. Heller is attracted to and dates other
‘‘Equal Access to Housing in HUD women, whereas Cagle believes that a woman
the Price Waterhouse sex-stereotyping
Programs Regardless of Sexual should be attracted to and date only men.’’); Centola
Orientation or Gender Identity’’ rule, v. Potter, 183 F. Supp. 2d 403, 410 (D. Mass. 2002)
12 Macy v. Dept. of Justice, No. 0120120821, 2012
(‘‘Sexual orientation harassment is often, if not
which provides that persons may not be EEOPUB LEXIS 1181, *13 (EEOC Apr. 20, 2012); always, motivated by a desire to enforce
denied access to HUD programs because see also Lusardi v. Dept. of the Army, No. heterosexually defined gender norms. In fact,
of sexual orientation or gender identity. 0120133395, 2015 EEOPUB LEXIS 896, *17 (EEOC stereotypes about homosexuality are directly related
HUD Response: The Fair Housing Act Apr. 1, 2015). to our stereotype about the proper roles of men and
13 Attorney General Memorandum, Treatment of women.’’). Cf. Videckis v. Pepperdine Univ., 2015
already expressly prohibits Transgender Employment Discrimination Claims U.S. Dist. LEXIS 167672, *16 (C.D. Cal. 2015) (‘‘It
discrimination based on pregnancy as Under Title VII of the Civil Rights Act of 1964 (Dec. is impossible to categorically separate ‘sexual
part of its prohibition of discrimination 15, 2014), posted at http://www.justice.gov/file/ orientation discrimination’ from discrimination on
because of familial status (42 U.S.C. 188671/download. Similarly, the Office of the basis of sex or from gender stereotypes; to do
3602(k)), and HUD’s Equal Access Rule Personnel Management revised its so would result in a false choice. Simply put, to
nondiscrimination regulations to make clear that allege discrimination on the basis of sexuality is to
applies only to HUD programs. sex discrimination under Title VII includes state a Title IX claim on the basis of sex or
HUD agrees with the commenters’ discrimination based on gender identity. See 5 CFR gender.’’).
view that the Fair Housing Act’s 300.102–300.103; see also OFCCP Directive 2014– 16 Baldwin v. Dep’t of Transp., EEOC Appeal No.
prohibition on sex discrimination 02, Gender Identity and Sex Discrimination (Aug. 0120133080, slip op. at 9–11 (July 16, 2015);
19, 2014) (stating that discrimination based on Complainant v. Dep’t of Homeland Sec., EEOC
prohibits discrimination because of gender identity or transgender status is Appeal No. 0120110576, slip op. at 1 (Aug. 20,
gender identity. In Price Waterhouse v. discrimination based on sex), posted at http:// 2014) (‘‘While Title VII’s prohibition of
Hopkins, the Supreme Court interpreted www.dol.gov/ofccp/regs/compliance/directives/ discrimination does not explicitly include sexual
Title VII’s prohibition of sex Directive_2014–02_508c.pdf. orientation as a basis, Title VII prohibits sex
14 See Glenn v. Brumby, 663 F.3d at 1317 discrimination, including sex-stereotyping
discrimination to encompass
(‘‘discrimination against a transgender individual discrimination and gender discrimination’’ and
discrimination based on non- because of her gender nonconformity is sex ‘‘sex discrimination claims may intersect with
conformance with sex stereotypes, discrimination, whether it is described as being on claims of sexual orientation discrimination.’’);
stating that ‘‘[i]n forbidding employers the basis of sex or gender.’’); see also Finkle v. Couch v. Dep’t of Energy, EEOC Appeal No.
to discriminate against individuals Howard Cnty, 12 F. Supp. 3d 780, 788 (D. Md. 0120131136, slip op. at 1 (Aug. 13, 2013) (finding
2014) (holding that ‘‘Plaintiff’s claim that she was harassment claim based on perceived sexual
because of their sex, Congress intended discriminated against ‘because of her obvious orientation is a discrimination claim based on
to strike at the entire spectrum of transgender[] status is a cognizable claim of sex failure to conform to gender stereotypes); Culp v.
disparate treatment of men and women discrimination under Title VII’’); Rumble v. Dep’t of Homeland Sec., EEOC Appeal 0720130012,
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resulting from sex stereotypes.’’ 11 Fairview Health Services, No. 14–cv–2037, 2015 slip op. at 1 (May 7, 2013) (Title VII covers
U.S. Dist. LEXIS 31591, *4–5 (D. Minn. Mar. 16, discrimination based on associating with lesbian
Taking note of Price Waterhouse and its 2015) (in Affordable Care Act case, holding that colleague); Castello v. U.S. Postal Serv., EEOC
progeny, in 2010, HUD issued a ‘‘[b]ecause the term ‘transgender’ describes people Appeal No. 0520110649, slip op. at 1 (Dec. 20,
memorandum recognizing that sex whose gender expression differs from their assigned 2011) (vacating prior decision and holding that
discrimination prohibited by the Fair sex at birth, discrimination based on an individual’s complainant stated claim of discrimination based
transgender status constitutes discrimination based on sex-stereotyping through evidence of offensive
Housing Act includes discrimination on gender stereotyping. Therefore, Plaintiff’s comments by manager about female subordinate’s
transgender status is necessarily part of his ‘sex’ or relationships with women); Veretto v. U.S. Postal
11 490 U.S. 228, 251 (1989). ‘gender’ identity’’). Serv., EEOC Appeal No. 0120110873, slip op. at 1
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![Federal Register / Vol. 81, No. 178 / Wednesday, September 14, 2016 / Rules and Regulations 63059
appellate courts have declined to find types of harassment may also violate the to both pre-acquisition and post-
sex discrimination under Title VII based Fair Housing Act, HUD should provide acquisition discrimination claims.
on the sole fact of the person’s sexual a definition of harassment. Other Moreover, HUD has long interpreted
orientation, those courts nonetheless commenters strongly supported the and enforced these provisions of the Act
recognized the Price Waterhouse sex- rule’s definitions of quid pro quo and and others to protect against
stereotyping theory may be used to find hostile environment harassment, discrimination that occurs before one
discrimination based on sex.17 These describing them as clear and inclusive, acquires a dwelling as well as while one
Title VII legal authorities are consistent and stated that the definitions and is living in the dwelling. HUD’s 1989
with HUD’s 2010 memorandum, in related examples provided in the rule regulations interpreting sections 804(b),
which HUD interprets the Fair Housing clarify what conduct the Fair Housing 804(f)(2), and 818 of the Act, for
Act’s prohibition on sex discrimination Act prohibits and will aid all example, provide that discrimination
to include, at a minimum, stakeholders’ understanding of the prohibited under these provisions
discrimination related to an individual’s rule’s provisions. includes the ‘‘maintenance or repairs of
sexual orientation where the evidence HUD Response: The term harassment sale or rental dwellings,’’ ‘‘[d]enying or
establishes that the discrimination is has broad colloquial usage with no limiting the use of privileges, services,
based on sex stereotypes. HUD’s defined parameters. For this reason, the or facilities associated with a dwelling,’’
interpretation of sex discrimination final rule defines the specific terms and threatening, intimidating or
under the Fair Housing Act is also ‘‘quid pro quo’’ and ‘‘hostile interfering with persons ‘‘in their
consistent with the Department of environment harassment.’’ Other enjoyment of a dwelling.’’ The inclusion
Health and Human Services’ rule conduct that might generically be of language covering the maintenance of
interpreting sex discrimination under referred to as harassment might fall in housing, the continued use of privileges,
Section 1557 the Affordable Care Act 18 the categories of quid pro quo or hostile services, or facilities associated with
and the Department of Labor’s rule environment, or the conduct may housing, and the ‘‘exercise or
interpreting sex discrimination under constitute a different type of enjoyment’’ of housing indicates
Title VII of the Civil Rights Act of discriminatory housing practice in circumstances in which residents—as
1964.19 violation of section 818 of the Act or opposed to just applicants—benefit from
Issue: Some commenters asked HUD other provisions of the Act, or the the Act’s protections throughout their
to provide a definition of harassment. A conduct may not violate the Act at all. residency.
commenter noted that the proposed rule As the preamble to the proposed rule Sections 100.65(b)(6)–(7) of the
defines two types of harassment—quid explained, a violation of section 818 proposed and of the final rule further
pro quo and hostile environment, but may be established using the standards illustrate some ways in which a person
does not define the general term for quid pro quo or hostile environment may violate sections 804(b), 804(f)(2),
‘‘harassment.’’ Another commenter harassment or by the specific elements and 818 of the Fair Housing Act:
stated that if HUD believes that other of a section 818 violation, i.e., (1) the ‘‘conditioning the terms, conditions, or
plaintiff or complainant exercised or privileges relating to the sale or rental
(July 1, 2011) (court found that ‘‘Complainant has enjoyed—or aided or encouraged of a dwelling, or denying or limiting the
alleged a plausible sex-stereotyping’’ claim of another person in the exercise or
harassment because he married a man).
services or facilities in connection
17 See, e.g., Gilbert v. Country Music Ass’n, 432
enjoyment of—a right guaranteed by therewith, on a person’s response to
F. App’x 516, 520 (6th Cir. 2011) (acknowledging sections 803–06; (2) the defendant’s or harassment because of [a protected
the validity of a sex-stereotyping claim ‘‘based on respondent’s conduct constituted characteristic]; ‘‘subjecting a person to
gender non-conforming ‘behavior observed at work coercion, intimidation, a threat, or
or affecting . . . job performance,’ such as . . .
harassment because of [a protected
‘appearance or mannerisms on the job,’ ’’ but
interference; and (3) a causal connection characteristic] that has the effect of
rejecting the plaintiff’s sex discrimination claim existed between the exercise, imposing different terms, conditions, or
because his ‘‘allegations involve discrimination enjoyment, aid or encouragement of the privileges relating to the sale or rental
based on sexual orientation, nothing more. He does right and the defendant’s or
not make a single allegation that anyone
of a dwelling or denying or limiting
discriminated against him based on his ‘appearance
respondent’s conduct. services or facilities in connection with
or mannerisms’ or for his ‘gender non- Issue: Some commenters expressed the sale or rental of a dwelling.’’ In sum,
conformity.’ ’’) (quoting Vickers v. Fairfield Med. concern that the proposed rule did not the Act and HUD’s regulations,
Ctr., 453 F.3d 757, 763 (6th Cir. 2006); Pagan v. expressly state that sections 804(b) and including this final rule, make clear that
Gonzalez, 430 F. App’x 170, 171–72 (3d Cir. 2011) 818 of the Fair Housing Act apply to
(recognizing that ‘‘discrimination based on a failure the Act prohibits discrimination that
to conform to gender stereotypes is cognizable’’ but discrimination that occurs after the occurs while a person resides in a
affirming dismissal of the plaintiff’s sex complainant or plaintiff acquires the dwelling, and courts have repeatedly
discrimination claim based on ‘‘the absence of any dwelling. The commenters stated that interpreted the Act similarly.20
evidence to show that the discrimination was based some courts have held that these
on Pagan’s acting in a masculine manner’’); Dawson
v. Bumble & Bumble, 398 F.3d 211, 221, 222–23 (2d provisions apply only to discrimination 20 See, e.g., Bloch v. Frischholz, 587 F.3d at779–
Cir. 2005) (observing that ‘‘one can fail to conform that affects access to housing and urged 81 (ruling that post-sale conduct by a homeowner’s
to gender stereotypes in two ways: (1) Through HUD to add language to the rule making association could violate section 804(b) of the Act
behavior or (2) through appearance, but dismissing and allowing section 3604(b) claims to address
the plaintiff’s sex discrimination claim because she
clear that these particular provisions
post-acquisition conduct was consistent with
‘‘has produced no substantial evidence from which apply to post-acquisition discrimination HUD’s regulations (citing 24 CFR 100.65(b)(4)));
we may plausibly infer that her alleged failure to claims. Comm. Concerning Cmty. Improvement v. City of
conform her appearance to feminine stereotypes HUD Response: HUD believes that the Modesto, 583 F.3d 690, 713 (9th Cir. 2009)
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resulted in her suffering any adverse employment definitions of ‘‘quid pro quo’’ and (concluding that the Act covers post-acquisition
action’’). See also Hively v. Ivy Tech Community discrimination); Neudecker v. Boisclair Corp., 351
College, 2016 U.S. App. LEXIS 13746, *16–25 (7th ‘‘hostile environment harassment’’ make F.3d at 364 (finding plaintiff’s post-acquisition
Cir. 2016) (reviewing this line of cases). clear HUD’s view that the Act covers harassment claim valid under the Act); DiCenso v.
18 Nondiscrimination in Health Programs and
post-acquisition conduct and therefore Cisneros, 96 F.3d 1004, 1008 (7th Cir. 1996)
Activities, 81 FR 31376, 31388–90 (May 18, 2016) no additional language is required. (recognizing claim for sexual harassment hostile
(to be codified at 45 CFR part 92). housing environment under the Act); Honce v.
19 Discrimination Because of Sex, 81 FR 39108,
These definitions mirror the coverage of Vigil, 1 F.3d at 1089–90 (recognizing that the Act
39137–40 (June 15, 2016) (to be codified at 41 CFR sections 804(b), 804(f)(2), and 818 of the prohibits both quid pro quo and hostile housing
part 60–20). Fair Housing Act, which plainly apply Continued
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Issue: Some commenters asked HUD of the Act. As the Supreme Court has significant misunderstanding among
to clarify how to distinguish potentially stated, ‘‘true threats’’ have no First public and private housing providers
actionable harassment under the Fair Amendment protection.21 In Notice about the circumstances under which
Housing Act from protected speech FHEO–2015–01, HUD has set out they may be liable. This regulation
under the First Amendment. A substantive and procedural guidelines provides greater clarity in making that
commenter said that it is not clear how regarding the filing and investigation of assessment. HUD will continue to offer
conduct that allegedly constitutes Fair Housing Act complaints that may guidance and training on the Fair
harassment under the rule may be implicate the First Amendment.22 The Housing Act generally and on this final
distinguished from other speech or Notice discusses how HUD handles rule, as needed.
conduct that is constitutionally complaints against persons who are not Issue: A commenter recommended
protected or so trivial so as not to otherwise covered by the Act, but who that the rule expand the limits for
qualify as harassment in the first place. are alleged to have violated Section 818 damages in cases that establish sexual
Another commenter said that courts of the Act. harassment in housing.
have consistently held that the First Issue: A commenter suggested that the HUD Response: HUD declines to
Amendment protects a tenant who rule is unnecessary because other make this change because it is
publicly speaks about a neighbor, even administrative and legal remedies unnecessary. The Act contains no limit
if that conduct is motivated by already exist for victims of harassment on damages that may be awarded,
discriminatory intent. Another under state and local law. Another specifically authorizing an award of
commenter asked whether the proposed commenter suggested that the rule is ‘‘actual damages.’’ 42 U.S.C. 3612(g)(3);
rule would implicate constitutional unnecessary because HUD has already 3613(c)(1); 3614(d)(1)(B).
protections of free speech or free charged cases involving harassment Issue: A commenter asked HUD to
exercise of religion if the housing under the Act. consider expanding the time for filing
provider evicts a tenant where, for HUD Response: This final rule sexual harassment complaints where a
example, two tenants are having heated formalizes and provides uniform hostile environment case includes
religious arguments about the other’s standards for evaluating complaints of subsequent harassment that occurs
choice of religious attire. Another quid pro quo and hostile environment many months after the initial act of
commenter stated that the proposed rule harassment under the Fair Housing Act. sexual harassment.
properly balanced the competing rights HUD Response: HUD declines to
While other administrative and legal
at issue and did not interfere with adopt this recommendation because the
causes of action may exist for victims of
constitutionally protected speech Fair Housing Act specifically defines
quid pro quo and hostile environment
because the rule would not encompass the statute of limitations for filing
harassment under landlord-tenant law,
speech that is merely offensive or that complaints. It is one year after an
tort law, or other state law, they do not
causes nothing more than hurt feelings. alleged discriminatory housing practice
substitute for the protections against
HUD Response: As discussed occurred or terminated for a complaint
discrimination and the remedies
elsewhere in this preamble, not every with HUD and two years after an alleged
provided under the Act. Moreover, the
dispute between neighbors is a violation discriminatory housing practice
fact that HUD has previously issued
of the Fair Housing Act. Moreover, occurred or terminated for a civil action
charges of discrimination involving
speech that is protected by the First in federal district court or state court.
quid pro quo or hostile environment
Amendment is not within the Act’s See 42 U.S.C. 3610; 3613. If a violation
harassment does not negate the need for
prohibitions. First Amendment is continuing, the limitations period
this rule.
protections do not extend to certain acts runs from the date of the last occurrence
Issue: A commenter asked HUD to
of coercion, intimidation, or threats of or termination of the discriminatory
abandon the rulemaking process and
bodily harm proscribed by section 818 act.23
instead provide specific, clear guidance
to the regulated community so that 1. Quid Pro Quo Harassment:
environment sexual harassment); Woods-Drake v.
Lundy, 667 F.2d 1198, 1201 (5th Cir. 1982) (finding housing providers can ascertain the § 100.600(a)(1)
that a landlord’s discriminatory conduct against types of behavior that do and do not Issue: A commenter asked how the
current tenants violated section 3604(b) of the Act); constitute harassment under the Fair
Richards v. Bono, No. 5:04CV484–OC–10GRJ, 2005 rule would ‘‘differentiate between a
WL 1065141, at *3 (M.D. Fla. May 2, 2005)
Housing Act. Other commenters situation of involuntary quid pro quo
(‘‘[b]ecause the plain meaning of ‘rental’ requested that HUD provide technical that genuinely must be governed by the
contemplates an ongoing relationship, the use of assistance on various aspects of the rule Act and a situation where one party is
that term in § 3604(b) means that the statute to residents, housing providers, and
prohibits discrimination at any time during the manipulating the rule following a
landlord/tenant relationship, including after the
practitioners to ensure all parties know mutually beneficial and agreed upon
tenant takes possession of the property’’); United their rights under the law. transaction.’’
States v. Koch, 352 F. Supp. 2d 970, 976 (D. Neb. HUD Response: HUD declines to HUD Response: The rule’s definition
2004) (‘‘[I]t is difficult to imagine a privilege that abandon this rulemaking. This
flows more naturally from the purchase or rental of of quid pro quo harassment requires a
a dwelling than the privilege of residing therein.’’); regulation is needed to formalize request or demand that is ‘‘unwelcome.’’
U.S. Department of Housing and Urban standards for assessing claims of A mutually beneficial and agreed upon
Development, Office of Fair Housing and Equal harassment under the Fair Housing Act transaction is not unwelcome and
Opportunity, Questions and Answers on Sexual and to clarify when housing providers
Harassment under the Fair Housing Act (2008), would not constitute quid pro quo
available at http://portal.hud.gov/hudportal/ and others covered by the Act may be harassment under the rule or the Act. It
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documents/huddoc?id=QAndASexualHarassment liable for illegal harassment or other is important to note, however, that, as
.pdf (recognizing that current tenants may file fair discriminatory housing practices. It has
housing complaints under the Act); Robert G.
the rule states, if an individual
Schwemm, Fair Housing Litigation After Inclusive
been HUD’s experience that there is
Communities: What’s New and What’s Not, 115 23 See, e.g., Havens Realty Corp. v. Coleman, 455
21 See,e.g., R.A.V. v. City of St. Paul, 505 U.S.
Colum. L. Rev. Sidebar 106, 122–23 (2015) U.S. 363, 380–81 (1982); Neudecker v. Boisclair
(explaining that many post-acquisition actions, 377, 388 (1992). Corp., 351 F.3d at 363 ; Spann v. Colonial Vill., Inc.,
such as evictions and harassment, may give rise to 22 Notice FHEO 2015–01 found at: http:// 899 F.2d 24, 34–35 (D.C. Cir. 1990); Heights Cmty
violations under sections 804(a) and 804(b) of the portal.hud.gov/hudportal/documents/huddoc?id=5- Congress v. Hilltop Realty, Inc., 774 F.2d 135, 139–
Act). 26-2015notice.pdf. 41 (6th Cir. 1985).
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Proposed § 100.600(c) provided that: ‘‘A nature of such an inquiry. HUD notes discriminatory conduct . . . ’’
single incident of harassment because of that § 100.205(b), which the commenter (emphasis added).
race, color, religion, sex, familial status, cited, does not describe conduct that Some commenters stated that this
national origin, or handicap may does not violate the Act, but rather standard creates almost certain liability
constitute a discriminatory housing provides examples of when the for landlords and that requiring actual
practice, where the incident is severe, or impracticality exception to the Act’s knowledge would be more fair to
evidences a quid pro quo.’’ Final design and construction requirements is property owners because liability would
§ 100.600(c) now provides: ‘‘A single applicable. Lastly, some of the suggested only attach for failing to act on known
incident of harassment because of race, examples are outside the scope of the discrimination. A commenter stated that
color, religion, sex, familial status, Act, e.g., the right to organize, but HUD the final rule should limit liability
national origin, or handicap may notes that persons would be protected where a housing provider has limited
constitute a discriminatory housing by the Act to the extent the harassment knowledge of misconduct. In contrast,
practice, where the incident is is because of their race, color, religion, other commenters stated that the ‘‘knew
sufficiently severe to create a hostile sex, familial status, national origin, or or should have known’’ standard is
environment, or evidences a quid pro disability. reasonable and consistent with the Fair
quo.’’ Housing Act, legal negligence
C. Liability for Discriminatory Housing principles, and business practices of
B. Illustrations: §§ 100.60, 100.65, Practices: § 100.7 housing providers. One commenter
100.80, 100.90, 100.120, 100.130, and complained that the proposed rule
100.135 a. Direct Liability for One’s Own
Discriminatory Conduct: § 100.7(a)(1)(i) appears to require actual knowledge,
Issue: Several commenters supported even though the standard only requires
the illustrations included throughout Issue: A commenter stated that the that a defendant ‘‘should have known’’
the proposed rule and asked HUD to language in § 100.7(a)(1)(i), which states of the harassment.
provide additional examples of that a person is directly liable for the Commenters asked HUD to clarify
prohibited practices in the final rule. person’s own conduct that results in a how a housing provider ‘‘should have
They requested more examples of: discriminatory housing practice, may known’’ about harassment, especially in
Unwelcome conduct; how quid pro quo lead to the liability of innocent actors the context of tenant-on-tenant
harassment occurs with respect to and third-parties who somehow harassment. A commenter questioned
protected classes other than sex; single contributed to an illegal discriminatory what the housing provider needs to
incidents that constitute a hostile action. The commenter gave as an know before liability attaches and
environment; and when direct liability example a situation in which a person whether the housing provider needs to
exists. Commenters also recommended supplied the pen that a housing know that the harasser’s actions violate
that HUD add to the final rule examples provider used to make notes on an the Fair Housing Act or only that the
clarifying the relationship between age application that the housing provider harasser took some action toward the
and disability and add examples of later rejected because of a protected victim. Several commenters expressed
harassment of pregnant women, characteristic of the applicant. concern that a PHA might be liable
Muslims, persons with limited English when a housing voucher holder is
HUD Response: The rule creates no
proficiency, persons with mental health- harassed but neither the apartment
new or enhanced forms of liability. As
related disabilities or HIV/AIDS, and owner nor voucher holder informs the
persons who assert their rights to discussed in the preamble of the
housing agency about the harassment.
organize. Another commenter stated proposed rule, § 100.7(a)(1)(i) does
One commenter expressed a similar
that HUD has provided useful nothing more than restate the most basic concern that owners living in another
illustrations of what does not violate the form of direct liability, i.e., that a person city or state may not learn that
Act in other fair housing contexts, and is directly liable for his or her own harassment is taking place on their
requested that HUD do the same here, discriminatory housing practices, as property unless the tenant tells the
citing 24 CFR 100.205(b) (concerning defined by the Act. Whether a person’s owner, and another commenter asked
the impracticality of meeting the Act’s conduct constitutes a discriminatory about a PHA’s potential liability when
design and construction standards). housing practice under sections 804– harassment occurs over the internet but
HUD Response: HUD retains the 806 or 818 of the Act depends upon the is unknown to the housing agency.
illustrations contained in the proposed specific facts. HUD Response: The ‘‘knew or should
rule, but otherwise declines to add more b. Direct Liability for Negligent Failure have known’’ standard is well
illustrations to the final rule. The rule To Correct and End Discrimination: established in civil rights and tort law.27
contains numerous illustrations of § 100.7(a)(1)(ii) and (iii) A housing provider ‘‘should have
possible quid pro quo and hostile known’’ of the harassment of one
environment harassment referencing all Issue: Several commenters expressed resident by another when the housing
protected classes. But whether illegal concern about the ‘‘should have known’’ provider had knowledge from which a
harassment has or has not occurred in standard in proposed § 100.7(a)(1)(ii) reasonable person would conclude that
a particular situation is fact-specific and and (iii), which states that a person is the harassment was occurring. Such
must be determined on a case-by-case directly liable for ‘‘(ii) [f]ailing to take knowledge can come from, for example,
basis. For this reason, the illustrations prompt action to correct and end a the harassed resident, another resident,
provided are simply more specific discriminatory housing practice by that
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descriptions of the legal standard, e.g., person’s employee or agent, where the 27 As the Supreme Court has recognized, fair
conditioning the availability of housing person knew or should have known of housing actions are essentially tort actions. See
Meyer v. Holley, 537 U.S. 280, 285 (2003) (citing
on a person’s response to sexual the discriminatory conduct,’’ and ‘‘(iii) Curtis v. Loether, 415 U.S. 189, 195–96 (1974)); see
harassment illustrates an unlawful [f]ailing to fulfill a duty to take prompt also Burlington Indus. v. Ellerth, 524 U.S. 742, 759
refusal to sell or rent. Providing action to correct and end a (‘‘An employer is negligent with respect to sexual
harassment if it knew or should have known about
illustrations as to what does not violate discriminatory housing practice by a the conduct and failed to stop it. Negligence sets a
the Act would not be appropriate third-party, where the person knew or minimum standard for employer liability under
because of the necessarily fact-specific should have known of the Title VII. . . .’’) (emphasis added).
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Issue: A commenter expressed which it knows or should have known, Ass’n, Inc., 318 F. Supp. 2d 1133 (S.D.
concern that proposed § 100.7(a)(1)(iii) the community association must do so. Fla. 2004), as an example of a case in
creates liability on the part of a As the commenter recognizes, a which the court dismissed the fair
community association (homeowner community association generally has housing claim against the housing
association, condominium or the power to respond to third-party provider because the plaintiffs failed to
cooperative) for the illegal acts of harassment by imposing conditions establish that the housing provider’s
residents over whom they have no authorized by the association’s CC&Rs ineffective response to the harassment
control. The commenter urged HUD to or by other legal authority.31 was due to racial animus. Commenters
remove or revise the proposed rule’s Community associations regularly also pointed to Ohio Civil Rights
extension of direct liability to require residents to comply with CC&Rs Comm’n v. Akron Metro. Hous. Auth.,
community associations for the and community rules through such 892 NE.2d 415, 420 (Ohio 2008), in
discriminatory actions of non-agents. mechanisms as notices of violations, which the court declined to impose
The commenter stated that community threats of fines, and fines. HUD liability on landlords for failing to take
associations generally lack legal understands that community corrective action in response to
authority to mandate that residents take associations may not always have the discriminatory harassment committed
actions described in the preamble of the ability to deny a unit owner access to by the landlord’s tenants. A commenter
proposed rule because the associations his or her dwelling; the rule merely also suggested that not requiring
cannot evict homeowners or otherwise requires the community association to discriminatory animus on the part of the
impose conditions not specifically take whatever actions it legally can take housing provider would amount to strict
authorized by the association’s to end the harassing conduct. liability. The commenters proposed that
covenants, conditions, and restrictions Issue: A few commenters suggested in light of these contrary federal and
(CC&Rs) or state law. The commenter that HUD should reconsider imposing state court decisions, HUD should
suggested that if the language in liability on a landlord for tenant-on- require proof of some degree of animus
§ 100.7(a)(1)(iii) remains, it should be tenant harassment because the law in by the housing provider before
modified to clearly state which terms this area is not well-settled. The subjecting the provider to direct liability
and conditions in association bylaws commenters expressed concern that for the acts of third parties.
and regulations constitute a duty on the proposed § 100.7(a)(1)(iii) exceeds the HUD Response: HUD does not agree
part of an association or its agents to scope of the Act by expanding liability that a housing provider’s failure to act
investigate and punish residents for for housing providers to include to correct third-party harassment must
illegal discriminatory housing practices. liability for third-party harassment of a be motivated by a discriminatory intent
resident when the housing provider did or animus before the provider can be
HUD Response: As noted above, HUD
not act with discriminatory intent. One held liable for a Fair Housing Act
has slightly revised § 100.7(a)(1)(iii) to commenter, relying on Title VII case law
clarify that a housing provider is liable violation. In reaching this conclusion,
and an interpretation of the phrase HUD considered its own experience in
under the Fair Housing Act for third- ‘‘because of,’’ stated that a landlord
party conduct if the provider knew or administering and enforcing the Fair
must have acted with discriminatory Housing Act, the broad remedial
should have known of the intent in order to be liable under the
discriminatory conduct, has the power purposes of the Act,32 relevant case law
Fair Housing Act. Another commenter including the Supreme Court’s recent
to correct it, and failed to do so. HUD stated that although section 804(a) of the
also notes that the rule does not add any ruling in Texas Department of
Fair Housing Act does not require a Community Affairs v. Inclusive
new forms of liability under the Act or showing of intentional discrimination,
create obligations that do not otherwise Communities Project, Inc. holding that
claims brought under sections 804(b)
exist. The rule does not impose the Fair Housing Act is not limited to
and 817 of the Act do, citing Francis v.
vicarious liability (see § 100.7(b)) on a claims of intentional discrimination,
King Park Manor, Inc., 91 F. Supp. 3d
community association for the actions of and the views of the EEOC regarding
420 (E.D.N.Y. 2015). Another comment
persons who are not its agents. Section Title VII. The case law cited by the
stated that to establish a housing
100.7(a)(1)(ii) describes a community commenters fails to support the
provider’s liability for failing to take
association’s liability for its own proposition that the Fair Housing Act
action to correct third-party harassment,
negligent supervision of its agents, and requires discriminatory intent in order
the plaintiff must show not just that the
§ 100.7(a)(1)(iii) describes a community to find a housing provider liable for its
housing provider failed to correct the
association’s liability for its own harassment but also that the housing negligent failure to correct resident-on-
negligence for failing to take prompt provider did so because of animus resident or other third-party
action to correct and end a against the victim due to a protected discriminatory conduct. The district
discriminatory housing practice by a characteristic. A commenter pointed to court decision in Francis v. Kings Park
third-party. With respect to Lawrence v. Courtyards of Deerwood Manor is the sole exception to that
§ 100.7(a)(1)(iii), the rule requires that principle, and HUD disagrees with its
when a community association has the 31 See, e.g., Wilstein v. San Tropai Condo. Master ruling. HUD notes that this decision is
power to act to correct a discriminatory Ass’n, supra*28–33; Reeves v. Carrollsburg Condo. on appeal to the Second Circuit.
housing practice by a third party of Unit Owners Ass’n, 1997 U.S. Dist. LEXIS 21762, Section 100.7(a)(1)(iii) sets out a
*26. See also Freeman v. Dal-Tile Corp., 750 F. 3d negligence standard of liability, which
413, 422–23 (4th Cir. 2014) (holding that ‘‘an
argument that it had no duty to stop harassment of employer is liable under Title VII for third parties
does not require proof of discriminatory
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plaintiff by other residents and holding that creating a hostile work environment if the employer
association could be liable where evidence knew or should have known of the harassment and 32 See e.g., Havens Realty Corp. v. Coleman, 455
indicated that association knew of the harassment failed to take prompt remedial action reasonably U.S. 363, 380 (1982) (Congress intended Fair
and bylaws authorized the association to regulate calculated to end [it].’’) (internal quotation marks Housing Act to be broadly remedial); cf. Jones v.
such conduct); see also Bradley v. Carydale and citations omitted); Galdamez v. Potter, 415 F. Alfred H. Mayer Co., 392 U.S. 409, 413 (1968)
Enterprises, 707 F. Supp. 217 (E.D. Va. 1989) 3d 1015, 1022 (9th Cir. 2005) (‘‘An employer may (describing the Fair Housing Act as ‘‘a
(finding that owners and managers’ failure to be held liable for the actionable third-party comprehensive open housing law’’); 42 U.S.C. 3601
address one tenant’s racial harassment of a harassment of its employees where it ratifies or (‘‘It is the policy of the United States to provide,
neighboring tenant states a claim under 42 U.S.C. condones the conduct by failing to investigate and within constitutional limitations, for fair housing
1981, 1982). remedy it after learning of it.’’). throughout the United States.’’).
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![Federal Register / Vol. 81, No. 178 / Wednesday, September 14, 2016 / Rules and Regulations 63069
intent or animus on the part of the premised on an incorrect reading of housing. The commenter stated that the
provider, but is far from strict liability. Title VII jurisprudence. The court rule will be an economic disincentive
Under this standard, a plaintiff or the misconstrued Title VII case law to for individuals, companies, and other
charging party must prove three require an agency relationship between investors to engage in the business of
elements to establish a housing an employer and a perpetrator of renting residential real estate and that
provider’s liability for third-party harassment in order to hold the the Section 8 voucher program depends
harassment: (1) The third-party created employer liable for negligently failing to on the participation of these private
a hostile environment for the plaintiff or stop sexual harassment by the entities in order to achieve other fair
complainant; (2) the housing provider perpetrator.34 In fact, under Title VII, an housing goals. The commenter
knew or should have known about the agency relationship is not required in expressed concern that the effect of the
conduct creating the hostile order to hold employers liable for proposed rule will be to reduce the
environment; and (3) the housing negligently failing to stop supply of available affordable units,
provider failed to take prompt action to discriminatory harassment of which the thus disproportionately harming low-
correct and end the harassment while employer knew or should have known. income families. Other commenters
having the power to do so. HUD does Both the EEOC and the federal courts raised concerns that landlords, when
not agree that a fourth element—that the have recognized that an employer may confronted by tenants who mutually
housing provider’s failure to act was be held liable for negligently failing to accuse each other of harassment, will be
more than negligent, and was motivated stop discriminatory harassment in the unable to take necessary corrective
by discriminatory intent—is necessary workplace by non-employees or non- actions because of the rule’s prohibition
or appropriate. agents.35 The principle of liability against moving or causing injury to a
Contrary to one comment, the codified in § 100.7(a)(1)(iii) of this final complaining tenant, or will reprimand
Supreme Court in Inclusive rule is consistent with these Title VII the wrong tenant because they lack
Communities Project has already ruled authorities and, in HUD’s view, expertise with investigations.
that the ‘‘because of’’ clause in the Fair appropriately serves the Fair Housing Numerous other commenters
Housing Act does not require proof of Act’s parallel antidiscrimination supported the rule’s recognition that a
discriminatory intent. While not objectives in the housing context. In housing provider may be directly liable
addressing every aspect of the cited sum, the proposed rule and this final for harassment of a tenant by the
decisions, HUD notes the following: In rule reflect HUD’s considered judgment, housing provider’s employee or a third-
Lawrence v. Courtyards of Deerwood consistent with prevailing precedent party. These commenters stated that any
Ass’n, cited by another commenter, the and EEOC regulations, that a housing suggestion that this rule will unduly
court dismissed the discriminatory provider (including a homeowner’s burden housing providers is
harassment claim not for lack of association) or property manager is exaggerated, that the rule is wholly
discriminatory intent on the part of the liable under the Act for negligently consistent with the ordinary
landlord, but because it found, inter failing to take corrective action against responsibilities of housing providers to
alia, that the dispute did not involve a third-party harasser when the provider ensure habitability, and that housing
discriminatory harassment of one tenant or manager knew or should have known providers are familiar with the tools
by another but instead reflected mutual of the harassment and had the power to they have to enforce their own rules—
antagonism between two tenants. The end it. In light of the above, HUD tools they frequently wield.
court in Lawrence distinguished Reeves declines to make the proposed revisions HUD Response: The rule does not
v. Carrollsburg Condo. Unit Owners to the final rule. create new or enhanced liabilities for
Ass’n, 1997 U.S. Dist. LEXIS 21762, *22 Issue: A commenter stated that the housing providers, including those who
(D.D.C 1997), which held the landlord imposition of liability on private participate in the Section 8 program.
liable under the Fair Housing Act for its landlords for tenant-on-tenant HUD believes that this rule will help
failure to adequately address sexual harassment is inappropriate and will clarify the obligations that housing
harassment of one tenant by another have several negative consequences. providers already have in offering and
because ‘‘the [Carrollsburg Condo] The commenter stated that private maintaining housing environments free
association’s by-laws specifically owners do not have the expertise or from discrimination and that comply
authorized the association to curtail resources to undertake what is with the Fair Housing Act. We are long
conduct that contravened the law’’ and essentially a social services function to past the time when racial harassment is
provided that a violation of local or mediate disputes between neighbors. In a tolerable price for integrated housing;
federal law was a violation of the addition, the commenter expressed a housing provider is responsible for
association rules.33 concern that the proposed rule could maintaining its properties free from all
Finally, the state court decision cited make it more difficult and risky for discrimination prohibited by the Fair
by one commenter did not involve property owners to take affirmative Housing Act. Under the Act,
claims under the Fair Housing Act and steps to operate racially integrated discriminatory practices are those that
does not provide reason for HUD to alter violate sections 804, 805, 806, or 818.
§ 100.7(a)(1)(iii) at the final rule stage. In 34 892 NE.2d at 419–20. Such practices do not encompass all
Ohio Civil Rights Commission v. Akron 35 See 29 CFR 1604.11(e) (‘‘An employer may also incivilities, and thus it is important to
Metropolitan Housing Authority, the be responsible for the acts of non-employees, with note that not every quarrel among
respect to sexual harassment of employees in the neighbors amounts to a violation of the
Ohio Supreme Court’s refusal to hold a workplace, where there employer (or its agents or
Fair Housing Act.36 Ending harassing or
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landlord liable under a state civil rights supervisory employees) knows or should have
law for failing to take corrective action known of the conduct and fails to take immediate
in response to one tenant’s racial and appropriate corrective action.’’); see also, e.g., 36 See, e.g., Bloch v. Frischholz, 587 F.3d at 783
Freeman v. Dal-Tile Corp., 750 F.3d 413, 422–24 (quoting Halprin v. Prairie Single Family Homes of
harassment of another tenant was (4th Cir. 2014) (employer potentially liable for Dearborn Park Ass’n, 388 F.3d 327, 330 (7th Cir.
failing to address discriminatory harassment by a 2004) (noting that interference under § 818 ‘‘is more
33 Lawrence v. Courtyards of Deerwood Ass’n, 318 customer); Lockard v. Pizza Hut, Inc., 162 F.3d than a ‘quarrel among neighbors’ ’’); Sporn v. Ocean
F. Supp. 2d at 1149 (citing Reeves v. Carrollsburg 1062, 1072–75 (10th Cir. 1998) (same; collecting Colony Condominium Assn, 173 F. Supp. 2d 244,
Condo. Unit Owners Ass’n, 1997 U.S. Dist. LEXIS cases recognizing employer liability for failing to 251–52 (D.N.J. 2001) (noting that section 818 ‘‘does
21762 at *22. correct third-party harassment). Continued
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![63070 Federal Register / Vol. 81, No. 178 / Wednesday, September 14, 2016 / Rules and Regulations
otherwise discriminatory conduct may tort liability principles, as well as frustrating, displeasing, or annoying.
necessitate evicting the tenant who has current federal Fair Housing Act The Act does not, however, require that
engaged in the conduct, not the jurisprudence, this rule codifies HUD’s a dwelling be made available to a person
aggrieved tenant.37 The Act does not, longstanding view that a property whose tenancy would constitute a direct
however, prohibit housing providers owner, including a PHA, may be held threat to the health or safety of others or
from offering to move an aggrieved liable for failing to take corrective action would result in substantial physical
tenant, as long as that tenant may refuse within its power in response to tenant- damage to the property of others.38 The
the offer without consequence or on-tenant harassment of which the housing provider must make an
retaliation. owner knew or should have known. individualized assessment as to whether
Issue: Some commenters stated that Where a PHA receives a complaint or such a threat exists based on reliable
the proposed rule outlining third-party otherwise learns of possible objective evidence that considers: (1)
liability conflicts with HUD’s PIH discriminatory harassment of one The nature, duration, and severity of the
Notice 2015–19, titled Guidance for resident by another, the PHA is advised risk of injury; (2) the probability that
Public Housing Agencies (PHAs) and to assess the situation and, if necessary, injury will actually occur; and (3)
Owners of Federally-Assisted Housing take appropriate corrective action to end whether there are any reasonable
on Excluding the Use of Arrest Records the harassment. accommodations that will eliminate the
in Housing Decisions. One commenter Issue: Several commenters expressed direct threat. In evaluating a recent
was concerned that PIH Notice 2015–19 concern that application of the rule history of overt acts, a housing provider
makes it harder for PHAs to correct would conflict with HUD’s homeless or must take into account whether the
situations that may lead to hostile permanent supportive housing programs individual has received intervening
environment harassment, while the or might have a detrimental effect on treatment or medication that has
proposed harassment rule would make persons with mental disabilities. A eliminated the direct threat. Reasonable
it easier for PHAs to be held liable for commenter stated that tenants with accommodations must be made when
the activities of tenants who take actions severe mental health disabilities may they may be necessary to afford such
against other tenants to create a hostile create a hostile environment for persons an equal opportunity to use and
environment. Another commenter was neighbors and asked HUD to explain enjoy a dwelling. HUD refers the reader
concerned that PHAs would be forced to what direct responsibility the housing to the Joint Statement of HUD and DOJ
choose whether to comply with HUD’s provider has to correct negative on Reasonable Accommodations under
harassment rule or with HUD’s Notice, behaviors. A commenter stated that the the Fair Housing Act for further
which prohibits the use of an arrest rule incentivizes evictions over efforts information.39
record as evidence of criminal activity to determine whether a reasonable
accommodation might be appropriate 1. Corrective Action: § 100.7(a)(2)
that can support an adverse admission,
for persons with mental disabilities. Issue: A commenter asked HUD to
termination, or eviction decision. These
Another commenter stated that because remove the prohibition against causing
commenters therefore asked HUD to
tenants with mental illness often have injury to a complaining party.
remove third-party liability from the HUD Response: HUD declines to
rule. difficulty finding housing, the proposed
rule might result in an increased rate of remove the prohibition on causing
HUD Response: HUD believes the additional injury to a person who has
commenters’ concerns are misplaced homelessness among persons with
mental disabilities. A commenter asked already been injured by illegal
because there is no conflict between this harassment. Permitting such additional
HUD to revisit the proposed rule’s third-
rule and PIH Notice 2015–19. The rule injury would be inconsistent with the
party liability provision to avoid
does not add any new forms of liability Act’s purposes to prevent unlawful
harming this particularly vulnerable
under the Fair Housing Act and the discrimination and remedy
population.
formalization of clear and consistent Other commenters stated that the rule discrimination that has already
standards for evaluating harassment would help protect many vulnerable occurred.
claims under the Act does not conflict persons from eviction. These Issue: One commenter requested
with the requirements of the PIH Notice. commenters supported the statement in further guidance as to what constitutes
Compliance with PIH Notice 2015–19 the proposed rule’s preamble that appropriate corrective action by a
does not prevent a PHA from eviction is only one of the many housing provider to stop tenant-on-
considering reliable evidence of relevant corrective actions housing providers tenant harassment. The commenter
criminal activity when considering how may utilize to address harassment. specifically inquired whether a single
to respond to complaints of harassment. HUD Response: The rule neither verbal statement by a landlord to a
Nor does this rule require a PHA to changes a housing provider’s tenant who allegedly engaged in
make use of arrest records to determine responsibilities toward tenants with harassing conduct would be sufficient
whether discriminatory harassment has mental disabilities nor incentivizes corrective action to relieve a landlord
occurred. Consistent with traditional evictions of such persons. It is not from liability under the rule. Another
uncommon for the behavior of one commenter asked HUD to impose
not [] impose a code of civility’’ on neighbors); tenant to frustrate, displease, or annoy realistic and reasonable limitations on
United States v. Weisz, 914 F. Supp. 1050, 1054–
55 (S.D.N.Y. 1996) (holding that allegations that another tenant. This is true for behavior housing providers’ obligation to take
Jewish neighbor harassed complainants because of by tenants with and without psychiatric corrective action.
their religion were ‘‘nothing more than a series of disabilities. The rule does not require a HUD Response: There is no one way
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skirmishes in an unfortunate war between housing provider to take action that a housing provider must respond to
neighbors’’). But see Ohana v. 180 Prospect Place,
996 F. Supp. 238, 243 (E.D.N.Y. 1998) (neighbors whenever one tenant engages in complaints of third-party harassment,
who intentionally intrude upon quietude of behavior that another tenant finds
another’s home may violate Act). objectionable. The Act prohibits 38 42
U.S.C. 3604(f)(9).
37 See, e.g., Miller v. Towne Oaks East 39 SeeJoint Statement of HUD and DOJ on
discrimination against applicants and
Apartments, 797 F. Supp. 557, 562 (E.D. Tex.1992) Reasonable Accommodations Under the Fair
(finding landlord liable for violating Act by evicting
tenants with disabilities, including Housing Act (May 17, 2004), posted at http://
both harasser and victim of harassment instead of evicting individuals with disabilities www.hud.gov/offices/fheo/library/
only harasser). because other tenants find them huddojstatement.pdf.
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![63072 Federal Register / Vol. 81, No. 178 / Wednesday, September 14, 2016 / Rules and Regulations
actions within its power to promptly liable for the actions of his or her agents by its brokers in the scope of their
correct and end a discriminatory taken within the scope of their agency, but disagreed that a housing
housing practice. Elsewhere in the relationship or employment, or for provider should be liable for
preamble, HUD discusses various actions taken outside the scope of their misconduct of a janitorial employee
options that may be available to housing relationship or employment when the outside the scope of that employee’s
providers to address neighbor-on- agent is aided in the commission of duty because he wore a badged uniform
neighbor harassment. such acts by the existence of the agency or possessed keys or passes to tenants’
Issue: A commenter stated that relationship.41 Determining whether an dwellings. Another commenter asked
owners should be encouraged to use agency relationship exists is a factual for clarity on the reasoning behind the
positive incentives, such as promoting determination that looks to an agent’s assertion in the preamble to the
better communication with—and responsibilities, duties, and functions; proposed rule that an agent who
healthy relationships among—tenants, whether the discriminatory conduct of harasses residents or applicants is
and educating tenants about their rights the agent was within the scope of the necessarily aided by his or her agency
to prevent harassment, instead of taking agency relationship or aided by the relationship with the housing provider.
corrective actions that may harm existence of the agency relationship is HUD Response: As discussed
tenants, such as ending a lease or also a fact-specific inquiry. throughout this preamble, the proposed
evicting a tenant—. Issue: Some commenters questioned and final rule do not create new forms
HUD Response: HUD agrees that the statement in the proposed rule’s of liability. Instead, HUD has decided to
positive incentives are useful tools for preamble that a principal is vicariously adopt well-established principles of
preventing harassment. HUD believes, liable for the actions of an agent or agency law, including that a principal
however, that warnings, threats of employee taken outside the scope of the may be vicariously liable for the actions
evictions, evictions, and lease agency relationship or employment of an agent or employee that are taken
terminations may also be necessary when the agent or employee is aided in outside the scope of the employment or
corrective actions to end harassment. the commission of such acts by the agency relationship if the agent or
The preamble and rule make clear that existence of the agency relationship. A employee is aided in committing the
there is no one way to prevent or correct commenter agreed that a principal is acts by the existence of the employment
harassment, only that the methods need vicariously liable for the acts of its or agency relationship. Agency law
to be effective at ending it. agents committed within the scope of must be applied to the specific facts at
c. Vicarious Liability: § 100.7(b) the agency, regardless of knowledge or issue to determine whether such a
intent to violate the Act by the situation exists and gives rise to a
Issue: Several commenters questioned principal, but believes that, in adopting principal’s liability. The statement in
the description of vicarious liability at the ‘‘aided in agency’’ standard, the the proposed rule that an agent who
§ 100.7(b) of the proposed rule. One proposed rule goes beyond traditional engages in hostile environment
commenter said § 100.7(b) could be tort concepts and does not reflect the harassment of residents or applicants is
interpreted to impose vicarious liability limited concepts of vicarious liability aided by the agency relationship with
on an organization’s directors, officers, endorsed in Meyer v. Holley. The the housing provider was not intended
or owners and suggested HUD clarify, commenter considered it acceptable to to suggest the agent is necessarily so
consistent with Meyer v. Holley, that it hold a real estate company liable for aided with respect to every
is the organization—not the individual discriminatory acts or statements made discriminatory housing practice. It was
directors, officers, or board members— intended to explain one of the reasons
who are the ‘‘principal or employer’’ 41 See, e.g., Glover v. Jones, 522 F. Supp. 2d 496, HUD chose not to import into the Fair
subject to vicarious liability under the 507 (W.D.N.Y. 2007) (holding that ‘‘a property Housing Act the Title VII affirmative
Fair Housing Act. The commenter asked owner may be vicariously liable under the Fair
Housing Act for the actions of an employee even
defense to an employer’s vicarious
HUD to issue clarification that the when they are outside the scope of employment liability for hostile environment
proposed regulations do not contravene . . . if the employee was aided in accomplishing harassment. As explained in that
or attempt to reverse Meyer v. Holley, the tort by the existence of the agency relation.’’) context, a housing provider’s agent who
537 U.S. 280 (2003). In contrast, other (quoting Mack v. Otis Elevator Co., 326 F. 3d 116,
123 (2d Cir. 2003) (internal quotation marks engages in harassment holds a position
commenters applauded the description omitted); see also Boswell v. GumBayTay, No. 2:07– of power and authority over the
of vicarious liability in the rule, stated CV–135–WKW[WO], 2009 U.S. Dist. LEXIS 45954, victimized resident or applicant,
that the description follows well- *17 (M.D. Ala. June 1, 2009) (holding that vicarious regardless of the agent’s specific duties.
liability attached to property owner where property
established common law tort and manager’s ‘‘position essentially gave him unfettered This is because a resident or applicant
agency principles, and expressed access to communicate with and personally visit has only an arms-length economic
support for the proposed rule’s reliance [the plaintiff]’’ and he ‘‘used his power as property relationship with the housing provider,
on Meyer v. Holley. manager as a vehicle through which to perpetrate while an agent-perpetrator is clothed
HUD Response: Subsection 100.7(b) his unlawful conduct by refusing repairs, raising
the rent, and attempting to evict [the plaintiff] as with the authority of the housing
merely describes the well-established a consequence for [her] refusal to provide sexual provider. Given this inherent imbalance
concept of vicarious liability, under favors.’’); Glover at 522 F. Supp. 2d at 507 (rejecting of power and control over the terms or
which principals may be held liable for defendant property owner’s motion for summary conditions of the housing environment,
judgment on the issue of vicarious liability where
the discriminatory acts of their agents or evidence showed that property manager used his the distinction between harassment by
employees whether or not they knew of ‘‘position as the de facto landlord to perpetrate FHA supervisory and non-supervisory
the discriminatory conduct. As [harassment] violations . . . giving] him the employees that supported the creation
asabaliauskas on DSK3SPTVN1PROD with RULES
articulated in Meyer v. Holley, and as opportunity to visit the apartment when he wanted,
and enabl[ing] him to control Plaintiff’s rent’’);
of the affirmative defense in the
explained in the preambles to the Richards v. Bono, 2005 U.S. Dist. LEXIS 43585 at employment context do not extend to
proposed rule and this final rule, *30 (holding that wife/co-owner of property could the housing context.
traditional agency principles apply to be vicariously liable for husband’s harassment
the Fair Housing Act.40 Under agency where husband acted as her agent and used his D. Other Issues
position as owner, property manager, and
principles, a principal is vicariously maintenance supervisor to subject plaintiff to
Issue: A commenter stated that HUD
sexual harassment by using a key to enter plaintiff’s should apply the proposed rule only to
40 537 U.S. at 282, 287. apartment and threatening plaintiff with eviction). its own investigative and administrative
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![Federal Register / Vol. 81, No. 178 / Wednesday, September 14, 2016 / Rules and Regulations 63075
■ 9. In § 100.135, revise paragraph (d) to (2) Hostile environment harassment. Dated: August 18, 2016.
read as follows: Hostile environment harassment refers Gustavo Velasquez,
to unwelcome conduct that is Assistant Secretary for Fair Housing and
§ 100.135 Unlawful practices in the selling,
brokering, or appraising of residential real
sufficiently severe or pervasive as to Equal Opportunity.
property. interfere with: The availability, sale, [FR Doc. 2016–21868 Filed 9–13–16; 8:45 am]
rental, or use or enjoyment of a BILLING CODE 4210–67–P
* * * * *
dwelling; the terms, conditions, or
(d) Practices which are unlawful
privileges of the sale or rental, or the
under this section include, but are not
limited to: provision or enjoyment of services or DEPARTMENT OF HOMELAND
(1) Using an appraisal of residential facilities in connection therewith; or the SECURITY
real property in connection with the availability, terms, or conditions of a
sale, rental, or financing of any dwelling residential real estate-related Coast Guard
where the person knows or reasonably transaction. Hostile environment
should know that the appraisal harassment does not require a change in 33 CFR Parts 100 and 165
improperly takes into consideration the economic benefits, terms, or
[Docket Number USCG–2015–0854]
race, color, religion, sex, handicap, conditions of the dwelling or housing-
familial status, or national origin. related services or facilities, or of the RIN 1625–AA00, AA08
(2) Conditioning the terms of an residential real-estate transaction.
Special Local Regulations and Safety
appraisal of residential real property in (i) Totality of the circumstances. Zones; Recurring Marine Events and
connection with the sale, rental, or Whether hostile environment Fireworks Displays Within the Fifth
financing of a dwelling on a person’s harassment exists depends upon the Coast Guard District
response to harassment because of race, totality of the circumstances.
color, religion, sex, handicap, familial (A) Factors to be considered to AGENCY: Coast Guard, DHS.
status, or national origin. ACTION: Final rule.
determine whether hostile environment
■ 10. In § 100.400, add paragraph (c)(6) harassment exists include, but are not
to read as follows: SUMMARY: The Coast Guard is issuing a
limited to, the nature of the conduct, the
final rule that revises the list of special
§ 100.400 Prohibited interference, coercion context in which the incident(s)
local regulations and safety zones
or intimidation. occurred, the severity, scope, frequency,
established for recurring marine events
* * * * * duration, and location of the conduct, and fireworks displays that take place
(c) * * * and the relationships of the persons within the Fifth Coast Guard District
(6) Retaliating against any person involved. area of responsibility. This rule revises
because that person reported a (B) Neither psychological nor physical the listing of events that informs the
discriminatory housing practice to a harm must be demonstrated to prove public of regularly scheduled marine
housing provider or other authority. that a hostile environment exists. parades, regattas, other organized water
■ 11. Add subpart H, consisting of Evidence of psychological or physical events, and fireworks displays that
§ 100.600, to read as follows: harm may, however, be relevant in require additional safety measures
determining whether a hostile provided by regulations. Under this
Subpart H— Quid Pro Quo and Hostile environment existed and, if so, the rule, the list of recurring marine events
Environment Harassment amount of damages to which an requiring special local regulations or
aggrieved person may be entitled. safety zones is updated with revisions,
§ 100.600 Quid pro quo and hostile
environment harassment. (C) Whether unwelcome conduct is additional events, and removal of events
sufficiently severe or pervasive as to that no longer take place in the Fifth
(a) General. Quid pro quo and hostile Coast Guard District. When these
environment harassment because of create a hostile environment is
evaluated from the perspective of a regulations are enforced, certain
race, color, religion, sex, familial status, restrictions are placed on marine traffic
national origin or handicap may violate reasonable person in the aggrieved
in specified areas. This rulemaking
sections 804, 805, 806 or 818 of the Act, person’s position.
project promotes efficiency by
depending on the conduct. The same (ii) Title VII affirmative defense. The eliminating the need to produce a
conduct may violate one or more of affirmative defense to an employer’s separate rule for each individual
these provisions. vicarious liability for hostile recurring event, and serves to provide
(1) Quid pro quo harassment. Quid environment harassment by a supervisor notice of the known recurring events
pro quo harassment refers to an under Title VII of the Civil Rights Act requiring a special local regulation or
unwelcome request or demand to of 1964 does not apply to cases brought safety zone throughout the year.
engage in conduct where submission to pursuant to the Fair Housing Act. DATES: This rule is effective October 14,
the request or demand, either explicitly
or implicitly, is made a condition (b) Type of conduct. Harassment can 2016.
related to: The sale, rental or availability be written, verbal, or other conduct, and ADDRESSES: To view documents
of a dwelling; the terms, conditions, or does not require physical contact. mentioned in this preamble as being
privileges of the sale or rental, or the (c) Number of incidents. A single available in the docket, go to http://
asabaliauskas on DSK3SPTVN1PROD with RULES
provision of services or facilities in incident of harassment because of race, www.regulations.gov, type USCG–2015–
connection therewith; or the color, religion, sex, familial status, 0854 in the ‘‘SEARCH’’ box and click
availability, terms, or conditions of a national origin, or handicap may ‘‘SEARCH’’. Click on Open Docket
residential real estate-related constitute a discriminatory housing Folder on the line associated with this
transaction. An unwelcome request or practice, where the incident is rule.
demand may constitute quid pro quo sufficiently severe to create a hostile FOR FURTHER INFORMATION CONTACT: If
harassment even if a person acquiesces environment, or evidences a quid pro you have questions about this
in the unwelcome request or demand. quo. rulemaking, call or email Dennis Sens,
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Document Created: 2016-09-14 02:27:13
Document Modified: 2016-09-14 02:27:13
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Rules and Regulations | |
| Action | Final rule. | |
| Contact | Lynn Grosso, Acting Deputy Assistant Secretary for Enforcement and Programs, Office of Fair Housing and Equal Opportunity, Department of Housing and Urban Development, 451 7th Street SW., Room 5204, Washington DC 20410-2000; telephone number 202- 402-5361 (this is not a toll-free number). Persons with hearing or speech impairments may contact this number via TTY by calling the toll- free Federal Relay Service at 800-877-8339. | |
| FR Citation | 81 FR 63054 | |
| RIN Number | 2529-AA94 | |
| CFR Associated | Aged; Fair Housing; Individuals with Disabilities; Mortgages and Reporting and Recordkeeping Requirements |
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