The Wall Street Journal is reporting that the parties in the Fair Housing Act case pending before the Supreme Court have reached a tentative settlement deal.

The case, Mount Holly v. Mount Holly Gardens Citizens in Action, involves the township of Mount Holly, New Jersey’s attempt to redevelop a crime-ridden, blighted housing development and replace it with new, market-rate housing. A group of residents sued, claiming that the township violated Title VIII of the Civil Rights Act of 1968 (popularly known as the Fair Housing Act) because the redevelopment plan had a disparate impact on minorities.

The Fair Housing Act prohibits discrimination in housing and authorizes individuals to sue governmental entities to challenge racially discriminatory housing policy. The text of the act does not allow for disparate impact claims—that is, claims based on a statistical showing that minorities suffer disproportionately from certain policies rather than proof of actual intentional discrimination—and the Supreme Court has never recognized such claims under the act, and with good reason: They can lead to real discrimination. Roger Clegg from the Center for Equal Opportunity has noted:

The disparate-impact standard for antidiscrimination law pushes people to do one or both of two things: Get rid of legitimate selection criteria, or use a racial double standard to ensure that the numbers come out right.… Disparate impact makes illegal what any rational person would not define as discrimination. And by forcing a change in neutral standards for hiring, renting and the like in order to count outcomes by race, it actually causes discrimination.

The township of Mount Holly would not be the first to give in to pressure to settle. In the 2011 term, the Supreme Court was poised to hear Magner v. Gallagher, a challenge to the enforcement by the city of St. Paul, Minnesota, of safety codes that were racially neutral but allegedly had a disparate impact. Many thought the Supreme Court would rule against the dubious disparate impact theory, but the parties agreed to dismiss the case just two weeks before the oral argument. As Heritage’s Hans von Spakovsky pointed out, then-Assistant Attorney General Thomas Perez convinced St. Paul to drop its appeal in exchange for the Justice Department’s agreement not to intervene in a False Claims Act case against the city worth up to $200 million.

When Mount Holly reached the Supreme Court, it was no surprise that the justices agreed to take the case. Now, however, the Court may well be deprived of a second chance to review the use of the disparate impact theory in the housing context.

However, another case is currently pending before a federal district court in Washington. This case brought by insurance trade groups challenges a U.S. Department of Housing and Urban Development rule authorizing disparate impact liability under the Fair Housing Act. Thus, even if the township of Mount Holly indeed settles its case, this is not the last the Supreme Court will see of the nebulous disparate impact theory.