Washington CNN  — 

The Supreme court on Thursday re-affirmed a federal law passed in 1968 to combat housing discrimination by holding that the law allows not only claims for intentional discrimination but also, claims that cover practices that have a discriminatory effect, even if they were not motivated by an intent to discriminate.

Civil rights advocates say such “disparate impact” claims are essential to combat subtle instances of discrimination.

Justice Anthony Kennedy wrote the 5-4 opinion for a closely divided Court concerning the scope of the Fair Housing Act.

“Much progress remains to be made in our nation’s continuing struggle against racial isolation,” he said, noting that cities have become more diverse under the Fair Housing Act.

“The Court acknowledges the Fair Housing Act’s continuing role in moving the nation toward a more integrated society,” he wrote.

His opinion was joined by Justices Ruth Bader Ginsburg, Elena Kagan, Sonia Sotomayor and Stephen Breyer.

Attorney General Loretta Lynch said the Justice Department will make use of this ruling in the future.

“Bolstered by this important ruling, the Department of Justice will continue to vigorously enforce the Fair Housing Act with every tool at its disposal – including challenges based on unfair and unacceptable discriminatory effects,” she said in a statement.

“Housing is the most critical foundation for individuals and families seeking reassurances that the American Dream is within reach for everyone no matter what they happen to look like or wherever they live,” said Sherrilyn Ifill, the NAACP Legal Defense Fund president and director-counsel, in a statement. “Housing also represents opportunity and mobility and the Court’s ruling keeps the original spirit of fair housing guarantees intact. Today’s ruling signals a continuing commitment to equality will benefit future generations to come.”

Some companies, developers and housing authorities had argued that disparate impact claims cost time and money to investigate actions made with good intentions. And they said these claims force a state or private entity to engage in race-conscious decision-making to avoid legal liability.

Roger Clegg, president and general counsel of the Center of Equal Opportunity, said the ruling was “disappointing.”

“It fails to follow the language of the statute, and it will encourage race-based decision-making in the housing area—exactly what the Fair Housing Act was meant to prohibit,” he said.

In one of two dissents written by conservatives on the court, Justice Clarence Thomas said the court was in danger of constructing “a scheme that parcels out legal privileges to individuals on the basis of skin color.”

Justice Samuel Alito, in a separate dissent, argued Congress never specifically authorized “disparate impact” claims. He mentioned an earlier case involving the Fair Hou and attempts by the St. Paul, Minnesota, to purge a housing development of rats resulted in higher rents that disproportionately affected minorities.

“Something has gone badly awry when a city can’t even make slumlords kill rats without fear of a lawsuit,” Alito wrote.

The case decided Thursday, Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, began in 2008, when the Inclusive Communities Project, a non-profit organization that seeks to promote racial integration in Dallas, sued a state agency charged with allocating tax credits to developers who build low-income housing projects. The Inclusive Communities Project accused the Texas agency of disproportionately allocating the tax credits to properties in minority populated areas.

Lower courts had ruled in favor of the Inclusive Communities Project, and for years, other courts have allowed disparate impact claims to go forward. But critics say such claims have a negative impact on affordable housing.

“Housing authorities and developers are not able to make the same kind of decisions to develop affordable housing if they have to consider the effects of where they are developing and how the money is invested in housing,” said Michael W. Skojec, a lawyer with Ballard Spahr who filed a brief on behalf of the Houston Housing Authority in support of Texas.

Skojec said that whether housing is developed in poor neighborhoods or more affluent neighborhoods, developers could still be subject to claims of disparate impact based on statistics of how minorities are affected.

“What we are trying to do is get people not to consider race, or think of people in racial terms,” he said. “The disparate impact concept encourages and requires people to think about race in every decision.”

Justices divided

At arguments, the justices seemed closely divided. Justice Antonin Scalia asked questions that could be favorable to both sides, and Justice Stephen Breyer noted that the lower courts have been allowing such disparate impact claims for years.

“It’s been the law for 40 years,” he said. “Disaster has not occurred, and why, when something is so well established throughout the United States, should this court come in and change it?”

But Texas’s solicitor general argued that the Fair Housing Act “unambiguously precludes” claims of disparate impact. He said that while the statute forbids actions that discriminate “because of race” the language of the law “cannot support an additional prohibition on actions that discriminate because of any factor that happens to be correlated with race.”

The Obama administration weighed in against Texas, noting that the Department of Housing and Urban Development – the agency charged with administering the Fair Housing Act – interprets the act to allow disparate impact claims.