The Supreme Court ruled Thursday to preserve a key tool promoting racial equality in housing while fighting discrimination.

In a closely-divided decision, the high court ruled 5-4 in favor of allowing the Fair Housing Act to continue to challenge actions or practices with discriminatory results, known as “disparate impact,” in addition to both outright or intentional discrimination.

The ruling stemmed from a case between the Texas-based non-profit Inclusive Communities Project and the Texas Department of Housing and Community Affairs.

The Inclusive Communities Project fired the first salvo in a 2008 lawsuit, accusing the state agency of exclusively approving tax credits for low-income housing in heavily-populated African-American neighborhoods in Dallas, while denying tax credits in white neighborhoods.

Civil rights activists argued the practice only perpetuated the city’s history of racial segregation and made it more difficult for poor blacks to elevate to a higher social class.

Texas fired back, saying it was only complying with federal mandates governing the use of tax credits and was not intentionally discriminating.

But, as fair housing advocates cheered the ruling, several organizations in the housing and mortgage finance industry bristled at what some called a “dubious theory.”

U.S. Rep. Jeb Hensarling (R-Texas), chairman of the House Financial Services Committee, issued a statement after the ruling, saying “Inventing discrimination through a disparate impact theory” was not a helpful tool in fighting actual discrimination.

Hensarling also suggested that the Supreme Court’s allowance of the theory would actually hurt those minority groups the Fair Housing Act of 1968 was created to protect.

Disparate impact, he said, “will have predictable, negative consequences for all Americans who will experience a less competitive and more expensive market for housing and credit — all without providing meaningful support for the fight against actual discrimination.”

The National Low Income Housing Coalition is among those praising the high court’s decision to ensure what it calls a “safeguard against covert and unintended discrimination.”

“Everyone deserves an opportunity to have adequate housing,” coalition president Sheila Crowley said in a statement. “If discriminatory practices are allowed it decreases the opportunity for everyone — but especially for those most vulnerable in society — to live the American dream.”

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