In the case of Hills v. Gautreaux, 1975, the Supreme Court ruled that federal courts have the authority to order remedies for segregation beyond municipal boundaries if it is found that a federal agency has contributed to such segregation. The lawsuit was initiated by public housing residents in Chicago who alleged racial discrimination in how public housing was located and managed. They claimed this violated their Fifth Amendment rights and Title VI of the Civil Rights Act of 1964. The Department of Housing and Urban Development (HUD) Secretary Carla A. Hills appealed an earlier court decision ordering HUD to provide public housing outside racially segregated areas within Chicago city limits as part of its remedy for past discriminatory practices. In a unanimous decision, Justice Byron White wrote on behalf of the court upholding lower courts' decisions that both local authorities and HUD had intentionally perpetuated racial segregation in violation with constitutional principles.

In the dissenting opinion for Hills v. Gautreaux, Justice William H. Rehnquist argued that the Court had overstepped its boundaries by allowing a federal judge to order remedies beyond Chicago city limits for a problem confined within those limits. He contended that there was no evidence of discrimination outside of Chicago and thus, it was inappropriate to impose an area-wide solution on suburban areas not involved in the case or proven guilty of any wrongdoing. Furthermore, he believed this decision would set a dangerous precedent where courts could intervene and dictate housing policies without proper jurisdiction or expertise in urban planning matters. In his view, such decisions should be left to legislative bodies who are more equipped with resources and knowledge necessary for comprehensive policy-making.