[00:00:02] Speaker 01: Base number 20-5126, NYC Flash Inc. [00:00:06] Speaker 01: et al, the appellants, versus Marshall L. Fudge, Secretary of Housing and Urban Development in our official capacity, and United States Department of Housing and Urban Development. [00:00:16] Speaker 01: Mr. Joseph for the appellants, Ms. [00:00:18] Speaker 01: Powell for the appellants. [00:00:21] Speaker 02: Mr. Joseph, please proceed when you're ready. [00:00:23] Speaker 02: Good morning, your honors. [00:00:25] Speaker 02: May it please the court? [00:00:26] Speaker 02: My name's Lawrence Joseph. [00:00:27] Speaker 02: I'm representing the appellants. [00:00:29] Speaker 02: I'd like to first touch [00:00:32] Speaker 02: Two related housekeeping issues one, as I mentioned in a 28 J letter, one of the appellants, Mr fields. [00:00:40] Speaker 02: I've lost contact with him his his injuries are no different than anyone else's so we don't think it affects the article three. [00:00:49] Speaker 02: In the context of the case, having just listened to the prior argument about article three, I noticed that we didn't brief standing the court below held that we had it I just want to assure you that that there is an ongoing article three case or controversy basically what's happening here is HUD. [00:01:10] Speaker 02: regulates public housing authorities, PHAs, where my clients are tenants, or in the case of Clash, an interest group that has tenant members and advocates on behalf of tenants. [00:01:24] Speaker 02: Before this mandate some some PHAs had smoking bans, some had less onerous ones than then HUDs and then HUD comes along and says you have to have this as a condition of the federal money you receive. [00:01:41] Speaker 02: So now all of the PHAs have adopted smoking bans. [00:01:49] Speaker 02: But if we were to succeed in withdrawing the HUD mandate, my clients would be free to negotiate with their PHAs to ameliorate the smoking bans or to rescind them entirely, whereas they can't do that now without HUD's pressure. [00:02:08] Speaker 02: And there's numerous cases for that kind of injury, which is affecting their article. [00:02:14] Speaker 02: By the way, these are government entities, the PHAs and HUD, of course. [00:02:18] Speaker 02: And so it's not only interfering with their contract between landlord and tenant, it's also interfering with their ability to petition government. [00:02:25] Speaker 02: So I hope there's no question about Article III anymore in this conversation, but I [00:02:31] Speaker 02: Given the length of Article 3 in the last case, I wanted to flag that. [00:02:35] Speaker 02: It's at JA 114 would be the place where that standing is established. [00:02:43] Speaker 02: And that ongoing interest to want to petition the PHAs and the HUDs in the way. [00:02:47] Speaker 02: So I think we're good on Article 3, other than Mr. Fields, who I don't think matters. [00:02:54] Speaker 02: I think the recent Supreme Court [00:02:58] Speaker 02: stay of the CDC's eviction moratorium is a pretty good framework for this case. [00:03:07] Speaker 02: We filed a 28-J on that a few days after it was, after the Supreme Court issued it. [00:03:12] Speaker 02: And essentially there, as here, you've got an old statute that an agency has sort of an old bottle that the agency has tried to pour new wine into in a way that [00:03:26] Speaker 02: that hasn't happened before. [00:03:28] Speaker 02: It's not clear that they have that authority, the federal agency. [00:03:33] Speaker 02: They're working in an area, landlord, tenant, et cetera, where there's a strong federalism presumption that the agency's statute should be read narrowly. [00:03:46] Speaker 05: Mr. Justice, can I just clarify though, because I was a little confused by your 28J letter [00:03:53] Speaker 05: Insofar as my understanding is that the Alabama Association case involved an entirely different agency than the one at issue here and a different statutory scheme. [00:04:05] Speaker 05: So what is it about this case that you think either informs or governs this court's consideration of whether HUD has the authority to do what it did in this case? [00:04:20] Speaker 02: Well, it's more of an analogy than a holding. [00:04:23] Speaker 02: It's a holding, I suppose, on the issues of the federalism component of the landlord-tenant relationship. [00:04:29] Speaker 02: That's something we've briefed as well separately, but it reinforces that. [00:04:34] Speaker 02: Certainly, it's a different statute. [00:04:36] Speaker 02: In their favor, that is CDC's favor, they have an emergency that's not at issue in our case. [00:04:43] Speaker 02: But the point is, you've got a statute that's been around for a long time, and the agency tries to [00:04:48] Speaker 02: creatively come up with new authority to do something new that they've not done before. [00:04:55] Speaker 02: But you're right. [00:04:57] Speaker 02: We're dealing with the Housing Act, not the Public Health Safety Act. [00:05:03] Speaker 05: Can we explore a little bit how new and what you mean by the agency is doing something that it hasn't done before? [00:05:09] Speaker 05: And the reason why I'm asking is because I looked up the [00:05:14] Speaker 05: regulations about lease requirements from HUD. [00:05:18] Speaker 05: And there's like a long list of stuff that HUD routinely requires PHAs to put into their leases. [00:05:27] Speaker 05: So when you say this is something new, you're not saying this is something new because HUD has never asked or required PHAs to have certain [00:05:40] Speaker 05: least conditions, right? [00:05:42] Speaker 02: Certainly, it goes into the lifestyle aspect of this particular decision. [00:05:47] Speaker 02: They're actually claiming to regulate how you interact with members of your own household. [00:05:54] Speaker 02: So by analogy, for example, when [00:05:58] Speaker 02: with regard to pets or lead paint, the Congress has amended the statute to sort of allow them to deal with that. [00:06:07] Speaker 02: Now, lead paint is more serious than pets. [00:06:09] Speaker 02: Pets is more like a lifestyle thing, although it certainly has, you know, cats can scratch things. [00:06:15] Speaker 02: So there are effects, but [00:06:17] Speaker 02: But the point is, before the HUD ventured into those sensitive areas, there was statutory authority. [00:06:26] Speaker 02: And the same thing happened again by analogy, different statute, with cigarettes in the FFDCA, the Food, Drug, and Cosmetic Act. [00:06:33] Speaker 02: there, something that looked a lot like a regulated commodity cigarettes, the Supreme Court said, well, no, that's not clear that Congress is going after this kind of, in our statute, in our context, lifestyle. [00:06:50] Speaker 03: But Mr. Joseph, the lifestyle aspect that you're raising is [00:06:55] Speaker 03: but one of the two major premises for justifications for the regulation in question. [00:07:03] Speaker 03: The other [00:07:04] Speaker 03: has to do with fire safety, with damage to the property. [00:07:10] Speaker 03: I mean, there's a reason that private landlords all over the country, maybe all over the world, are also prohibiting smoking where they can. [00:07:19] Speaker 03: Airport authorities and so on, because it causes damage. [00:07:23] Speaker 03: And when you have tenant turnover, there are extra costs to [00:07:28] Speaker 03: repairing the apartments. [00:07:31] Speaker 03: It is a completely separate justification. [00:07:34] Speaker 03: Why isn't it unimpaired by your lifestyle argument? [00:07:41] Speaker 02: Well, if the lifestyle issue were stricken, then they'd have to reconsider their rule. [00:07:54] Speaker 02: They didn't consider alternatives like [00:07:56] Speaker 02: have a deposit or like have fire insurance or certainly as to the smoking has to be more than 25 feet from the door. [00:08:09] Speaker 02: If they were just concerned about those issues, [00:08:14] Speaker 02: they would have smoking facilities closer to the door, but they're trying, they're trying, they're focused on the lifestyle thing. [00:08:21] Speaker 02: I understand. [00:08:22] Speaker 05: Why are you saying that? [00:08:23] Speaker 05: What do you mean by the lifestyle thing? [00:08:25] Speaker 05: Because I understood the statute to cover health and sanitation, and we're talking about air quality in the building. [00:08:33] Speaker 05: So are you equating lifestyle with air quality? [00:08:40] Speaker 05: I guess. [00:08:42] Speaker 02: Fair enough, I'm using a shorthand and I shouldn't have the light I mean they are trying to regulate lifestyle meaning the sense of they're trying to discourage smoking. [00:08:54] Speaker 02: And the, the intra [00:08:59] Speaker 02: So there's the intra unit exposure that they say they're trying to regulate now. [00:09:04] Speaker 02: And then there's the inter unit exposure, which is they quite frankly didn't document that well enough, we think, for a constitutional challenge. [00:09:15] Speaker 02: So. [00:09:16] Speaker 05: So you perceive them as not telling the truth when they say that the reason why they're regulating this is because they have evidence concerning [00:09:28] Speaker 05: the secondhand smoke effects, the effects on health and safety and the fire risks. [00:09:34] Speaker 05: You think their real reason is just they don't want their tenants to smoke inside, to smoke? [00:09:41] Speaker 02: There's a pretextual aspect to it, yes. [00:09:44] Speaker 02: There are, on top of that, if the [00:09:51] Speaker 02: opposition to smoking were removed, there would be other regulatory alternatives that they didn't consider, and that would make this arbitrary and capricious. [00:10:02] Speaker 03: Did you ask that, I know you had a good pretext. [00:10:08] Speaker 03: Did you argue that if the sole justification were the fire safety and damage prevention, that there was, as you just said now, they would have had to consider alternatives that they didn't and so on? [00:10:23] Speaker 02: Yes. [00:10:24] Speaker 02: The set of the MVMA case on that proposition cited the different things. [00:10:28] Speaker 03: You argued this before the agency. [00:10:29] Speaker 03: There was notice and comment by this agency. [00:10:32] Speaker 03: Did you put that in the record before? [00:10:34] Speaker 02: Oh, I'm sorry. [00:10:35] Speaker 02: You're asking about the comment period. [00:10:38] Speaker 03: Yeah. [00:10:38] Speaker 03: Yeah. [00:10:39] Speaker 03: You can't raise the exception here you didn't raise with them. [00:10:42] Speaker 02: Fair enough. [00:10:44] Speaker 02: So we argued it below in the district court. [00:10:46] Speaker 02: We argued it here in this court. [00:10:48] Speaker 02: We did argue in the comments that their data were pretextual. [00:10:56] Speaker 03: That's different. [00:10:59] Speaker 02: OK. [00:11:02] Speaker 02: I honestly don't know the answer to your question. [00:11:05] Speaker 02: I can. [00:11:06] Speaker 03: I think they have an adequate and independent ground on which to rest the regular lease requirement, which you have not really touched and therefore would be sufficient to to uphold the requirement. [00:11:23] Speaker 02: It's a little challenging, the difference between a constitutional challenge and an APA challenge, because in a constitutional challenge, if it's a rational basis standard, then under Peller and other cases in that canon, they don't even have to say the reason [00:11:46] Speaker 02: They don't even have to get the reason that they're regulating right if it's as long as you can make it up. [00:11:51] Speaker 02: Right. [00:11:52] Speaker 02: So on that side, this is a question as far as I'm concerned. [00:12:00] Speaker 02: So on the constitutional side, if I've missed your question, I apologize. [00:12:04] Speaker 02: Let me finish this thought if I could. [00:12:05] Speaker 02: So on the constitutional side, you can make things up. [00:12:09] Speaker 02: But on the APA side, it needs to be something that they justified in the record. [00:12:13] Speaker 02: That's where I'm from. [00:12:15] Speaker 02: No, I understand. [00:12:15] Speaker 02: But there's another facet to that that flips those, and that is that on the constitutional side, it's less clear that we're bound by the record. [00:12:27] Speaker 02: I grant you that. [00:12:32] Speaker 02: And so with that context that in constitutional, we're at a disadvantage if you can make up a new answer, but we're at an advantage because we can go beyond the record. [00:12:42] Speaker 02: Maybe I don't understand your question. [00:12:43] Speaker 03: Assume with me for the moment that, for one thing, that we'll start with a non-constitutional issue, which we ordinarily do. [00:12:53] Speaker 03: We don't reach a constitutional issue if we don't have to. [00:12:56] Speaker 03: And if you're a statutory issue, so we need to deal with, first, do your statutory claims survive? [00:13:03] Speaker 03: are they properly presented? [00:13:05] Speaker 03: I'm suggesting that a reason that the agency has an independent ground that you have not challenged and therefore your APA concerns are not well taken. [00:13:18] Speaker 03: And then we can move on to whether you have any constitutional ground for objection. [00:13:23] Speaker 02: I believe the [00:13:26] Speaker 02: So I don't think that anyone has raised your question, which I concede is a good question. [00:13:33] Speaker 02: But had they raised it, we would have rebutted it. [00:13:37] Speaker 02: So I'm going to need to do two things if I could. [00:13:39] Speaker 02: I need to go and look at the comments that may well be there. [00:13:43] Speaker 02: I don't know. [00:13:46] Speaker 03: And certainly suggests that they have an independent ground in their concern with their proprietary interest in the structures and the fire and safety and so on. [00:14:01] Speaker 02: Oh, but there, I mean, we did rebut those arguments when they raised them. [00:14:08] Speaker 02: They raised them for the first time in district court. [00:14:12] Speaker 03: So it's in the rulemaking document. [00:14:14] Speaker 03: And what is the data about the effects of the costs of having smoke damage to the buildings? [00:14:23] Speaker 03: They put a dollar figure on it. [00:14:25] Speaker 02: I see. [00:14:26] Speaker 02: So I'm going to have to look and see the extent to which we raise those arguments. [00:14:30] Speaker 02: I don't believe that's been put to me to respond to in court yet. [00:14:38] Speaker 02: So I don't know the answer. [00:14:40] Speaker 05: So can we do it as a hypothetical here today? [00:14:43] Speaker 05: So if the agency says setting aside air quality and secondhand smoke effects and the health risks, totally aside from that, the reason why we are requiring this is because there is a risk of fire to our buildings and smoke damage to our buildings, and we want to make sure that that doesn't happen. [00:15:09] Speaker 05: So we are requiring PHAs to put in their leases no tenants can smoke, right? [00:15:15] Speaker 05: That's the only thing. [00:15:17] Speaker 05: Are you saying the agency does not have the authority to do that under the statutory provision at issue here? [00:15:25] Speaker 02: I think the answer is yes. [00:15:27] Speaker 02: I mean, if it's pretextual, if there are other things that they could have considered to ameliorate those same things, their failure, [00:15:37] Speaker 02: They had an agenda here and. [00:15:40] Speaker 03: The failure to consider reasonable alternatives is something you can raise if you suggested them in the rulemaking and they didn't consider them. [00:15:49] Speaker 02: I'm pretty sure we suggested a no project alternative. [00:15:52] Speaker 03: I understand that, but you're just now saying, you know, deposit damage for damages and so on. [00:15:57] Speaker 03: This is at 11 and the red brief, the summary of their argument. [00:16:01] Speaker 03: determined that the prohibition would also reduce deaths, injuries, and property damage caused by smoking-related fires as well as maintenance costs." [00:16:10] Speaker 03: As I said, that goes, they argue that later on, you know, this is a summary, and they put a dollar figure on it. [00:16:20] Speaker 03: So, I mean, it seems to me that your APA argument just has to [00:16:27] Speaker 03: rise or fall on whether you've actually whether you've done rebutted that even raised it. [00:16:31] Speaker 03: And I don't think you have. [00:16:33] Speaker 02: And again, that the place where we would have raised it in the comments, not because we've argued against this. [00:16:38] Speaker 03: And you'd have to preserve it in your blue brief. [00:16:42] Speaker 03: And I don't think it's there. [00:16:44] Speaker 03: I don't think you're I mean, I realize you said pretext, but I don't think you said that even if it's not pretext, if it's an independent ground, it's somehow deficient. [00:16:56] Speaker 03: Am I correct in that? [00:16:57] Speaker 03: I think that we can tell by looking at the blue brief. [00:17:04] Speaker 03: And to move things along, I'll start with your summary. [00:17:23] Speaker 03: There. [00:17:24] Speaker 03: It's further into the brief, but it's not in summary. [00:17:28] Speaker 02: The point that we tried to rebut this with is that they would have had to consider alternatives that they didn't consider if this fire safety only rationale were raised. [00:17:41] Speaker 03: If you had proposed them before the agency, yes. [00:17:47] Speaker 02: I see. [00:17:48] Speaker 02: And I don't know if we had. [00:17:49] Speaker 02: We briefed it in both courts, but we [00:17:54] Speaker 02: I mean, I'm not sure if you're saying that the blue brief waived it, or that the blue brief failed to preserve that we raised it in the, in the agency. [00:18:02] Speaker 03: If it's not raised before the agency, then it was forfeited earlier. [00:18:10] Speaker 02: I think we did raise all this in the, in the blue brief, I can try and pull that up and find where. [00:18:21] Speaker 02: Or perhaps I could bring that up in rebuttal. [00:18:24] Speaker 03: I don't do that. [00:18:25] Speaker 03: Sure. [00:18:27] Speaker 03: And similarly, if we go to the if we go to the constitutional issues. [00:18:33] Speaker 03: Of course, the government needs only one valid claim of authority. [00:18:38] Speaker 03: And their most promising one I would say is the spending clause, right? [00:18:47] Speaker 03: Because the question there would be whether they're making a legitimate permissible condition on the expenditure in question here, correct? [00:18:59] Speaker 02: That's the only basis that they have for. [00:19:01] Speaker 03: Right, so they've got the Dole case on the passive restraints and some subsequent as well, but it seems to be well within the range of conditions on expenditures that the government has been upheld in imposing. [00:19:22] Speaker 02: Well, that's not the only part of the analysis. [00:19:24] Speaker 02: It's ambiguous. [00:19:25] Speaker 02: It's not even clear if it's enforceable. [00:19:27] Speaker 02: Their enforcement authority only extends to things that are substantial. [00:19:32] Speaker 02: They're trying to say this is a change in a mere adjustment. [00:19:36] Speaker 02: But you first have to ask, is it, quote, substantial, unquote, under their enforcement authority? [00:19:42] Speaker 02: If it is, then it's not a mere adjustment. [00:19:44] Speaker 02: If it's not, then it's not even enforceable. [00:19:46] Speaker 02: And they should take away the mandatory language. [00:19:53] Speaker 02: coercive in the sense that they, I mean, they not only claim the ability to terminate funding, but that's assuming it's enforceable. [00:20:02] Speaker 03: By the way, let me ask, is there anything in the record that shows, I don't think you've raised it in your briefs, the extent to which PHAs rely upon HUD funding? [00:20:14] Speaker 03: We say they do, but there's no numbers that I can see. [00:20:18] Speaker 02: There were we cited to it in the, I mean, essentially what happened is that we didn't address that we sort of assumed that. [00:20:30] Speaker 02: that these local agencies rely on the money. [00:20:35] Speaker 02: HUD did not counter on that issue. [00:20:38] Speaker 02: This case was decided on cross motions for summary judgment. [00:20:41] Speaker 02: So we would argue that that's an issue that they didn't win on either. [00:20:45] Speaker 02: This is not a 12b6 motion that we failed to state a claim. [00:20:49] Speaker 02: We think it's either coercive or it's not. [00:20:52] Speaker 02: And so what we did in a post-judgment motion is we- It's on you to show that it's coercive. [00:21:00] Speaker 04: That's just the way that the burdens lie. [00:21:03] Speaker 02: Well, for us to get summary judgment, but they got summary judgment. [00:21:06] Speaker 02: which means that it's not coercive. [00:21:09] Speaker 04: Right, but they can get some re-judgment by showing that you didn't meet your burden. [00:21:12] Speaker 02: Right. [00:21:12] Speaker 02: Oh, I would have thought there was an excluded middle there, which is neither side prevailed on the issue of conversion. [00:21:20] Speaker 02: But in any event, in a post-judgment motion, we submitted evidence. [00:21:23] Speaker 02: It's judicially noticeable. [00:21:24] Speaker 02: You can look at judicially noticeable evidence on appeal. [00:21:27] Speaker 02: We haven't moved separately for judicial notice, but we have pointed you to that [00:21:34] Speaker 02: from the appendix in the joint appendix, I can find that site. [00:21:41] Speaker 04: Let me make sure my colleagues don't have additional questions for you at this time. [00:21:46] Speaker 04: We'll give you a little bit of time for rebuttal, but if not, then why don't we hear from the government. [00:21:52] Speaker 04: Thank you, Mr. Joseph, Mrs. Powell. [00:21:55] Speaker 00: Thank you. [00:21:55] Speaker 00: Good morning. [00:21:55] Speaker 00: May it please the court, Lindsay Powell for the government. [00:21:58] Speaker 00: The rule that's at issue here is entirely in keeping both with prior standards that HUD itself has promulgated under the same authority to establish standards for safety and habitability in public housing. [00:22:10] Speaker 00: And it's also in keeping with the actions of other public and private authorities. [00:22:13] Speaker 00: So this isn't really breaking new ground in the way that's being suggested. [00:22:17] Speaker 00: Even prior to the rule, there were hundreds of public housing agencies that had implemented similar rules, dozens of municipalities. [00:22:24] Speaker 00: And this includes prohibiting smoking within individual dwelling units. [00:22:27] Speaker 00: And then many private landlords do the same. [00:22:30] Speaker 00: And the reasons for that are made clear in the administrative record here. [00:22:34] Speaker 00: HUD amply documented the significant risks of smoking in and around buildings. [00:22:40] Speaker 00: We have the substantial fire risk at the time the rulemaking record was put together. [00:22:45] Speaker 00: Smoking was the number one fire risk in these buildings. [00:22:48] Speaker 00: There is other property damage that ensues. [00:22:51] Speaker 00: And then of course, the science of secondhand smoke and inter-unit transfer is itself well-documented in the rule and prior to that by the search in general. [00:22:59] Speaker 00: So all three of these provide a substantial basis for the decision here. [00:23:04] Speaker 03: I think, Ms. [00:23:04] Speaker 03: Powell, the problem with secondhand smoke, if there is one, is not that it's not harmful. [00:23:10] Speaker 03: It's that it's not shown how the degree to which it ever permeates someone else's apartment. [00:23:18] Speaker 00: That is absolutely something that HUD addressed in the rulemaking and it is borne out by the science here. [00:23:24] Speaker 00: So that's addressed at length in the NPRM. [00:23:27] Speaker 03: What was borne out by the science? [00:23:30] Speaker 00: The inter-unit transfer does occur and that it causes harm. [00:23:36] Speaker 00: That is in the rulemaking record here. [00:23:38] Speaker 00: And there were some comments that superficially contested that and HUD addressed those in the final rule, again reiterating [00:23:46] Speaker 00: both the harms from secondhand smoke itself and the fact of interunit transfer, including the demonstrated scientific fact that [00:23:54] Speaker 00: there's no safe amount of secondhand smoke exposure. [00:23:57] Speaker 00: So even small amounts transferring between units through hallways, between walls, down air vents causes harm to other tenants. [00:24:06] Speaker 00: And HUD standards, if you sort of go back to the regulation, and this is a 24 CFR 966.4 F, there are a variety of tenant obligations. [00:24:16] Speaker 00: So I think sort of one of the intuitions at play here is that HUD in establishing standards for safety [00:24:23] Speaker 00: maybe principally regulating the conduct of public housing agencies themselves. [00:24:27] Speaker 00: And that's not how HUD has historically interpreted or implemented this statute. [00:24:32] Speaker 00: So at subsection F that I referenced, it's called tenants obligations. [00:24:36] Speaker 00: And there are a number of other requirements for tenants that ensure that other tenants are able to safely enjoy the premises. [00:24:43] Speaker 00: So for example, tenants are required to dispose of their garbage in a safe and sanitary manner. [00:24:48] Speaker 00: And so this is no more a lifestyle requirement than that. [00:24:53] Speaker 00: Tenants must comport themselves in a way that doesn't interfere with the safe enjoyment of other tenants. [00:24:58] Speaker 00: And not smoking indoors or near the premises in a way that causes the transfer of smoke into other units that creates a risk of fire and property damage is entirely in keeping with those prior exercises of authority by HUD. [00:25:15] Speaker 05: Can I just ask you about the scope of HUD's authority as you interpret the statute? [00:25:23] Speaker 05: Any level of health risk to individuals in these public housing complexes and structures, fair game. [00:25:33] Speaker 05: Is anything enough to make it sufficiently unsafe that you believe the Congress authorized HUD to regulate it? [00:25:43] Speaker 05: And I guess what I'm just getting at is the example, you can imagine a world in which [00:25:51] Speaker 05: HUD seeks to regulate what parents are feeding their children inside public health, excuse me, public housing complexes because we know that certain kinds of junk foods are unsafe. [00:26:05] Speaker 05: Is that on the table or does habitable, what is the word, or housing quality standards, does that do work to constrain HUD's authority in this context? [00:26:17] Speaker 00: So I want to answer generally and then take your specific example, if I may. [00:26:21] Speaker 00: So the statute itself is broad and wordly and doesn't direct a cost benefit analysis. [00:26:26] Speaker 00: So I think HUD does have significant leeway to determine what standards of safety and habitability should be. [00:26:33] Speaker 00: What is, and this is my second point, what is very different between this case and the example your honor gave and also between prior actions HUD has taken and the example your honor gave. [00:26:43] Speaker 00: is that HUD here isn't regulating conduct that really concerns only the individual choices being made within the unit. [00:26:51] Speaker 00: So HUD didn't say here [00:26:53] Speaker 00: We're prohibiting smoking because we think we have jurisdiction to protect people from themselves. [00:26:58] Speaker 00: That's not what this rule does. [00:26:59] Speaker 00: That's not what the prior tenant obligations that are at 966.4 F do. [00:27:07] Speaker 00: What these standards do is ensure that tenants are using their own property in a way that doesn't undermine the health or safety of other tenants. [00:27:14] Speaker 00: And so I think [00:27:14] Speaker 00: directing families, you know, to feed their children nutritious foods or telling people they can't drink sugary beverages is really different in kind from the rules that we're talking about here and that we've seen previously. [00:27:26] Speaker 00: These are not parochial [00:27:28] Speaker 00: in that sense, they are in keeping with general conditions of safe enjoyment. [00:27:32] Speaker 00: You can't have raucous parties, you can't be aggressive, you can't let your trash pile up in ways that really undermine the ability of others to go about their lives and safely enjoy the use of their own units. [00:27:45] Speaker 00: And this rule is entirely in keeping with that general framework. [00:27:49] Speaker 03: This is not the government as the nanny state, it's the government as the landlord. [00:27:52] Speaker 00: Precisely, Your Honor. [00:27:55] Speaker 00: precisely. [00:27:55] Speaker 00: And HUD has long inhabited that role in the context of the spending clause legislation where, of course, it's not regulating directly, but attaching these conditions of safety and habitability to the federal funds that it's offering the public housing agencies. [00:28:08] Speaker 03: To what degree are PHAs dependent, recipients, I should say, of federal funds? [00:28:14] Speaker 00: Are you asking me to agree to that premise. [00:28:16] Speaker 00: No i'm saying to what degree what extent to what degree i'm sorry that's that's not in the record here because it hasn't been litigated that the funding is. [00:28:25] Speaker 00: not insignificant, but there's nothing here to suggest that it rises to anything like the level seen in NHIB, NFIB, which was the only case where the level has been found to be coercive. [00:28:37] Speaker 00: And there, significantly, it was not only that the funding levels were so extreme, consisting of more than 10% of a state's total budget, it was also that the requirement issue fundamentally changed the term of the program. [00:28:49] Speaker 00: And the court relied on both of those factors in finding coercion. [00:28:53] Speaker 00: Here, neither is present. [00:28:54] Speaker 00: In addition to having nothing to suggest funding at that level, the program term does not fundamentally change the program. [00:29:01] Speaker 00: This is not a new program. [00:29:03] Speaker 00: It's another safety term in keeping with those that have previously been imposed in these leases. [00:29:09] Speaker 05: Can I revisit your conceptualization of what HUD's authority is? [00:29:14] Speaker 05: So do you say the same thing even if we're talking about unattached units? [00:29:21] Speaker 05: you know, it's one thing to have a raucous party or a bonfire or whatever in an apartment building. [00:29:27] Speaker 05: One could say it's another to have it in a separate standalone facility. [00:29:34] Speaker 05: So why does that get included as authorized by the statute? [00:29:41] Speaker 00: Yes, Your Honor, a few things. [00:29:42] Speaker 00: I mean, first, these are a small percentage of the sort of relevant housing units that we're talking about, and they haven't been [00:29:49] Speaker 00: separately challenged, either in this litigation or in the rulemaking itself. [00:29:52] Speaker 00: No one sort of parsed these out in the comments and said that HUD should be regulating differently. [00:29:57] Speaker 00: So there's really no, no big exception. [00:30:00] Speaker 00: But even if you just look at the risk of fire and the risk of property damage, those are absolutely things that it's within HUDs and the public housing agency's interest to regulate in that sort of proprietary role to ensure that the property damage [00:30:15] Speaker 00: is mitigated to a reasonable extent and that you know the conditions being imposed, I think, just sort of stepping back a bit here are again in keeping with what you would expect to see in other proprietary contexts so that private landlords themselves often impose [00:30:35] Speaker 00: similar conditions, even with respect to townhome units or freestanding units, which is what we're talking about with the single unit dwellings. [00:30:44] Speaker 00: So those separate considerations amply support the application of the rule there. [00:30:49] Speaker 05: And you don't see anything about tobacco that makes it different. [00:30:53] Speaker 05: I mean, there are, Mr. Joseph sort of alludes to this at times in his briefing, there are Supreme Court cases and the like that really comb in on the extent to which [00:31:05] Speaker 05: agencies can't regulate tobacco in the same way as they might other kinds of products? [00:31:15] Speaker 00: Yes, Your Honor. [00:31:15] Speaker 00: I think those cases were looking very specifically at particular exercises of authority in the context in which they arose. [00:31:22] Speaker 00: So if you look for example at Brown and Williamson and the question whether FDA could start regulating tobacco as a drug, the court wasn't asking sort of generally, you know, [00:31:31] Speaker 00: Was it appropriate for agencies to regulate tobacco? [00:31:34] Speaker 00: Could FDA exercise that specific authority under the Federal Food Drug and Cosmetic Act? [00:31:40] Speaker 00: When doing so, applying the standards of that act would effectively lead to banning the product, which it was clear from reference to other statutes that Congress didn't intend. [00:31:50] Speaker 00: So again, there's no sort of general notion out there that agencies can't regulate matters affecting tobacco. [00:32:00] Speaker 00: Agencies have to exercise the authorities that they have. [00:32:03] Speaker 00: And here HUD did precisely that. [00:32:05] Speaker 00: It has clear authority to establish standards of safety and habitability. [00:32:09] Speaker 00: And the administrative record spells out the three distinct ways in which the rule against smoking in and around housing promotes the safe and habitable public housing stock. [00:32:25] Speaker 03: Ms. [00:32:25] Speaker 03: Powell, you don't have to run out the clock. [00:32:27] Speaker 00: Thank you, Your Honor. [00:32:28] Speaker 00: If there are no further questions, we ask that you affirm. [00:32:31] Speaker 04: Thank you, Ms. [00:32:32] Speaker 04: Powell. [00:32:33] Speaker 04: Mr. Joseph, why don't you take two minutes for your rebuttal? [00:32:39] Speaker 04: You're muted, Mr. Joseph. [00:32:47] Speaker 02: Thank you. [00:32:48] Speaker 02: To Judge Jackson's question about single-family units, that's addressed at 397 in the Joint Appendix, so I disagree with Ms. [00:32:55] Speaker 02: Powell that it wasn't raised before the agency. [00:32:59] Speaker 02: To the question about reliance on funds at page 22 in the blue brief and Joint Appendix 300, [00:33:05] Speaker 02: to 318. [00:33:05] Speaker 02: We address the reliance. [00:33:08] Speaker 02: By the way, this is not a situation where they can just terminate funds, which are about almost half of the housing funds for the PHA. [00:33:18] Speaker 02: So it's not a percentage of the state budget, but for the PHAs themselves, it's a huge percentage. [00:33:25] Speaker 03: You said that's on the record of 318? [00:33:28] Speaker 02: JA 300 to 318. [00:33:31] Speaker 02: Yeah, this is part of our, again, that's our post judgment motion. [00:33:37] Speaker 02: You are allowed to take judicial notice on appeal. [00:33:40] Speaker 02: We cited that as well. [00:33:44] Speaker 02: The statute here is general. [00:33:46] Speaker 02: It's more like the Occupational Safety and Health Act than like the Safe Drinking Water Act. [00:33:52] Speaker 02: And so we discussed NRDC versus EPA, where the agency has this authority to figure out what's best. [00:34:00] Speaker 02: versus the OSHAC in the benzene case where it's like look safe doesn't mean risk free. [00:34:05] Speaker 02: This is a general statute and so that there's that tension. [00:34:08] Speaker 02: I don't think their statute goes as far as they're claiming. [00:34:12] Speaker 02: Interestingly enough, they also during the and this is [00:34:16] Speaker 02: I don't have a page number right now, but it is in the brief. [00:34:19] Speaker 02: They were asked by OMB some questions, and they said, well, if you're asking us, we don't know. [00:34:26] Speaker 02: And the point being that they're not experts in this field that they're trying to regulate. [00:34:30] Speaker 02: So they don't deserve deference, and their statute is not as loose and as deferential as, say, the Safe Drinking Water Act or the environmental statutes. [00:34:42] Speaker 02: That's not their role. [00:34:45] Speaker 02: I am just quick. [00:34:46] Speaker 02: Nanny State versus landlord. [00:34:47] Speaker 02: They are the regulator of the landlord. [00:34:49] Speaker 02: They are in Nanny State here. [00:34:52] Speaker 02: My time is up. [00:34:53] Speaker 02: May I continue? [00:34:53] Speaker 03: I'm looking at 397 of the JA, single family housing. [00:34:58] Speaker 03: Can you direct me within that page? [00:35:03] Speaker 03: OK. [00:35:06] Speaker 02: I don't usually use two screens since I'm having trouble getting my cursor to move from one to the other. [00:35:11] Speaker 02: I apologize. [00:35:13] Speaker 02: Maybe it's best just to read it here. [00:35:15] Speaker 03: Where is it on the page? [00:35:16] Speaker 02: Can you tell me that? [00:35:20] Speaker 02: Oh, I'm sorry, I'm in the right ballpark now. [00:35:24] Speaker 03: It's the right column. [00:35:26] Speaker 03: Well, the smoke free policy will also apply to scattered sites and single family. [00:35:30] Speaker 02: Yeah. [00:35:31] Speaker 02: And single family units that not lead to smoke intrusion. [00:35:33] Speaker 02: So they were asked about single family units. [00:35:38] Speaker 02: Right, that's exactly right. [00:35:39] Speaker 02: While smoking in single family units does not lead to smoke intrusion in adjacent units to risk of fire and increase. [00:35:46] Speaker 03: They made just the point, Ms. [00:35:50] Speaker 03: Powell suggested that where you have single family units, there's still the risk of fire damage and that's what they invoked. [00:35:57] Speaker 02: But I don't believe that's what Judge Jackson was asking. [00:36:00] Speaker 02: She's the owner, of course, of her question. [00:36:02] Speaker 02: But I thought she was asking about why are you concerned about inter-unit transfer when you have a standalone building? [00:36:12] Speaker 03: The answer was, well, we're still concerned about fire damage. [00:36:15] Speaker 02: Oh, and right. [00:36:17] Speaker 02: And so they had several opportunities to raise the concern about [00:36:23] Speaker 02: concern about smoke transferring between units or smoke being exposed to people within your own unit, that is your own household members, but they didn't raise it, which we argue suggests that the concern about intra- and inter-unit transfer [00:36:45] Speaker 02: is pretextual. [00:36:46] Speaker 02: They just, I mean, I'm sorry, intra-unit transfer is pretextual. [00:36:51] Speaker 02: They weren't concerned about that. [00:36:52] Speaker 02: They had several occasions where they could have cited that, this being one, but they didn't. [00:37:03] Speaker 03: I'm sorry, I thought you were saying that with multi-family units, properties, their concern was with [00:37:15] Speaker 03: And Miss Powell, we just discussed that, she and I, and here there is no other unit in a single family. [00:37:25] Speaker 03: And so the inter-unit concern goes away. [00:37:31] Speaker 03: And as she points out, the fire safety and damage concern remains. [00:37:35] Speaker 02: Right, and I'm sorry, what I was speaking to was they raised in the, [00:37:41] Speaker 02: in the district court and the district court adopted the idea that they were also concerned about intra-unit transfer. [00:37:48] Speaker 03: So that's going back to the nanny state. [00:37:53] Speaker 02: That is going back to the nanny state and that was pretextual. [00:37:58] Speaker 03: Certainly the emphasis here that I took away from this all was on inter-unit transfer. [00:38:04] Speaker 03: Certainly that's more compelling in any event. [00:38:09] Speaker 02: And then last, if we are at last, they don't merely have the authority to cancel funds, they have the authority to take the building. [00:38:17] Speaker 02: So if you ever took any money from them, and then they come up with a new requirement, they not only can terminate your funds, 100%, which is, as I said, almost half of the PHA's budget, but [00:38:34] Speaker 02: they can take the building, take title to the buildings. [00:38:38] Speaker 02: That is coercion beyond anything. [00:38:41] Speaker 05: Are you suggesting that that is only the case with respect to this particular condition? [00:38:50] Speaker 02: No. [00:38:51] Speaker 05: Naming or focusing on effects that apply to all these other conditions as well, right? [00:38:58] Speaker 02: Well, right. [00:38:59] Speaker 02: And those other conditions, presumably, were done for the benefit. [00:39:02] Speaker 02: I mean, if you're raising a timeliness argument implicitly there, this is the first. [00:39:07] Speaker 05: No, no. [00:39:08] Speaker 05: What I'm raising is the concern that you seem to be suggesting certain things are so unusual and untoward that here we now have them [00:39:19] Speaker 05: regulating lifestyle. [00:39:22] Speaker 05: And Ms. [00:39:22] Speaker 05: Powell responds, that happens all the time. [00:39:25] Speaker 05: Here's a bunch of other regulations that say no garbage, you keep your apartment clean, right? [00:39:32] Speaker 05: And then you say, well, if a person smokes and they violate this, you have the Fourth Amendment concern, and you say that the remedy could be that they take the building away. [00:39:47] Speaker 05: But presumably that's the remedy [00:39:50] Speaker 05: with respect to these other conditions as well. [00:39:52] Speaker 05: So the only new thing here is that they've added a condition concerning smoking, but with respect to things like remedy, that's always been the case. [00:40:02] Speaker 02: That doesn't make well, but again, this is a new condition after the other ones. [00:40:06] Speaker 02: By the way, I mean, taking out your garbage is habitability. [00:40:09] Speaker 02: That's that seems fair to me. [00:40:10] Speaker 02: But to the extent that there were these other conditions that my my clients didn't challenge, they're challenging this one because it matters to them. [00:40:18] Speaker 03: As any public housing authority ever found its building taken over by HUD because they violated or failed to enforce some of these tenant terms that are meant to protect habitability of other tenants. [00:40:32] Speaker 02: The point is they feel compelled. [00:40:34] Speaker 02: The answer is no, because they're going to follow it. [00:40:38] Speaker 02: But if it's outside HUD's authority. [00:40:40] Speaker 03: That's a good answer. [00:40:43] Speaker 04: I like that. [00:40:45] Speaker 04: And let me make sure there's no further questions for you, Mr. Joseph. [00:40:50] Speaker 04: Thank you, counsel. [00:40:51] Speaker 04: Thank you to both counsel. [00:40:52] Speaker 04: We'll take this case under submission.