In the case of Strycker's Bay Neighborhood Council, Inc. v. Karlen et al., 1979, the U.S Supreme Court ruled in favor of New York City’s urban renewal plan despite objections from a neighborhood council that it would disrupt racial balance and increase segregation in their community. The city had designated an area on Manhattan’s Upper West Side for redevelopment to include middle-income housing which was challenged by Strycker's Bay Neighborhood Council as violating Title VIII of the Civil Rights Act (Fair Housing Act). They argued that this decision did not adequately consider its impact on racial concentration within the district. However, the court held that while federal agencies are required to take into account any potential discriminatory effects when approving projects under Section 3608(d)(5) of Fair Housing Act, they are not obligated to prioritize such considerations over other statutory objectives or policy goals unless there is clear evidence showing discrimination intent.

In the dissenting opinion for Strycker's Bay Neighborhood Council, Inc. v. Karlen et al., Justice Thurgood Marshall argued that the majority had misinterpreted and misapplied previous rulings related to administrative law, particularly Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council, Inc.. He contended that while an agency is not required to consider every alternative solution proposed during a rulemaking process, it must give serious consideration to all significant alternatives presented during public comment periods or hearings on its proposals. In this case, he believed that the Department of Housing and Urban Development (HUD) failed in its duty under Section 102(2)(C) of National Environmental Policy Act (NEPA), which requires federal agencies to prepare detailed statements on environmental impacts of their proposed actions including any adverse effects and possible alternatives; because HUD did not adequately consider other options before deciding to sell property at issue for private development instead of using it for low-income housing as originally planned.