[00:00:00] Speaker 00: Case number 23-5275, National Association of Mutual Insurance Companies, a balance, versus United States Department of Housing and Urban Development, and Maria L. Fauci in her official capacity as Secretary of Housing and Urban Development. [00:00:17] Speaker 00: Mr. Shanmugam for the balance, Ms. [00:00:19] Speaker 00: Marcus for the appellees. [00:00:22] Speaker 01: Thank you, Judge Henderson, and may it please the court [00:00:25] Speaker 01: In inclusive communities, the Supreme Court held that disparate impact claims are cognizable under the Fair Housing Act. [00:00:32] Speaker 01: But at the same time, the Court cautioned that disparate impact liability under the FHA is limited in key respects, in part because of the constitutional concerns about the government's compelling the consideration of race and other protected characteristics. [00:00:48] Speaker 01: As applied to insurers' rate-making and underwriting decisions, [00:00:52] Speaker 01: HUD's 2023 rule contravenes the Supreme Court's limitations in two principal respects. [00:00:59] Speaker 01: First, it would cause race to be used and considered in a pervasive way. [00:01:04] Speaker 01: And second, it would transgress the requirement that there be a close causal connection between the challenged policy and any alleged disparate impact in light of the limitations that state law imposes on insurers' discretion. [00:01:19] Speaker 01: The government has blown off those concerns. [00:01:22] Speaker 01: In 2023, after allowing the 2020 rule to be enjoined, the government simply reinstituted the 2013 rule without any modifications in light of the Supreme Court's intervening decision in inclusive communities. [00:01:38] Speaker 01: While recognizing some of the problems with the 2023 rule, the District Court refused to enjoin it. [00:01:45] Speaker 01: Because the 2023 rule is inconsistent with the Fair Housing Act, [00:01:49] Speaker 01: As interpreted by the Supreme Court in inclusive communities, the district court's decision was erroneous and its judgment should be reversed. [00:01:58] Speaker 01: I'm happy to answer any questions that the court might have on the question of standing on which the court ordered supplemental briefing. [00:02:06] Speaker 01: As the court will be aware from our supplemental brief, we rely on two theories. [00:02:10] Speaker 01: First, the theory that there is self-evident standing here by virtue of the fact that the association's members are directly regulated. [00:02:18] Speaker 01: And second, we rely on the undisputed evidence that the rule will require the members to incur substantial monetary costs to ensure that their practices comply with the rule's substantive standards. [00:02:31] Speaker 02: I understand you have all of these affidavits. [00:02:34] Speaker 02: But in the face of the Supreme Court decision that says it warns again and frowns on the collection of data, particularly as it concerns race, and the Federal Register is replete with not just warnings again, but directions [00:03:04] Speaker 02: that this in no way requires anyone to collect any information, and that the FHA itself has a section that is included in the addendum 3614A, [00:03:26] Speaker 02: that allows the secretary to make rules, including rules for the collection, maintenance, and analysis of appropriate data, and it has not used that, I don't see any requirement, any duty, any likelihood or anything else of the insurers collecting this data other than this is what they have chosen to do. [00:03:55] Speaker 02: And so their so-called injury is self-inflicted under clever. [00:04:03] Speaker 01: Sure. [00:04:04] Speaker 01: So Judge Henderson, I'm happy to address that. [00:04:06] Speaker 01: And in some sense, I think that that also relates to the substance of our first claim concerning the pervasive consideration of race. [00:04:13] Speaker 01: So I will address that in both respects. [00:04:16] Speaker 01: I think the core of our argument here [00:04:21] Speaker 01: is that the disparate impact rule causes insurers to have to collect and then analyze data regarding protected characteristics and that by doing so, it inflicts the injury on the companies of having to conduct their practices in [00:04:42] Speaker 01: a different way and in a way that transgresses the limitations of inclusive communities. [00:04:49] Speaker 01: And I think that at its core, the government's argument on standing in this respect is very similar to their argument concerning our first merits argument. [00:04:59] Speaker 01: Their argument is, in essence, that the rule doesn't really change the existing landscape at all, that it really doesn't require us to do anything beyond what the FHA already requires. [00:05:12] Speaker 01: Now, we think that that argument is incorrect, and we also think that that's a merits argument that is irrelevant to standing. [00:05:19] Speaker 01: The reason why Clapper is distinguishable, Judge Henderson, for standing purposes is that Clapper involved third parties who were claiming that their communications could potentially be subject to the statutory requirement that they were challenging. [00:05:36] Speaker 01: And that's where the language concerning self-inflicted injury [00:05:40] Speaker 01: came into the equation. [00:05:41] Speaker 01: But here, by contrast, our argument is just the ordinary argument of a regulated party. [00:05:46] Speaker 01: It is that we are being subjected to new and impermissible restrictions on our conduct. [00:05:54] Speaker 03: Now, the government's- What is it in the rule to follow up? [00:05:58] Speaker 03: What is it in the rule in particular, not your summons? [00:06:02] Speaker 03: What is in the rule specifically and in particular that runs inconsistent with inclusive communities? [00:06:09] Speaker 01: Sure. [00:06:10] Speaker 01: So the government's argument here, I think I want to hear. [00:06:14] Speaker 01: Yeah, sure. [00:06:14] Speaker 03: That the government's argument. [00:06:16] Speaker 03: What is it in the rule, the written rule? [00:06:20] Speaker 03: As I look at it and I've looked at it many times and I'm not getting it. [00:06:24] Speaker 03: What's inconsistent with the written rule and inclusive communities? [00:06:29] Speaker 01: Sure. [00:06:30] Speaker 01: So I think we have two arguments, Judge Edwards. [00:06:32] Speaker 01: The first is that I think that it is our view that any [00:06:36] Speaker 01: imposition of disparate impact liability on rate making and underwriting decisions by insurers would cause the pervasive consideration of race. [00:06:48] Speaker 01: And remember that before- But that's not before us. [00:06:51] Speaker 05: Like whether insurers are subject to the disparate impact rate or NHA, that's not before us. [00:06:57] Speaker 01: Well, just to be clear, part of our injury here is that the 2023 rule [00:07:05] Speaker 01: extended unambiguously disparate impact liability to those practices, HUD rejected our efforts to ask for a clear exemption from that. [00:07:16] Speaker 01: And prior to the 2023 rule, it was not clear that disparate impact liability extended to us at all. [00:07:23] Speaker 05: You didn't even argue this before Judge Leon. [00:07:26] Speaker 05: You didn't say [00:07:28] Speaker 05: shouldn't be subject to FHA disparate impact liability at all because we're insurers. [00:07:32] Speaker 05: That's not before us. [00:07:34] Speaker 01: Well, to be clear, we made the argument the 2023 rule is violative of the limitations imposed by inclusive communities because it compels a pervasive consideration of race. [00:07:47] Speaker 05: Yes, but not that FHA disparate impact liability doesn't apply to insurers. [00:07:53] Speaker 05: You never made that argument that's not before us. [00:07:55] Speaker 01: So we are not making the argument that the FHA does not apply to insurers, nor are we making the argument that disparate impact liability could not apply to practices other than rate making or underwriting decisions. [00:08:08] Speaker 01: But to get to my second argument, which is the argument that I think focuses on particular features of the 2023 rule, we certainly think that the way that the burden shifting framework that is adopted in the 2023 rule operates puts this on the end of the spectrum where you have particularly pervasive consideration of race. [00:08:30] Speaker 01: And it may very well be the case that a more limited rule could comply with that limitation from inclusive communities. [00:08:37] Speaker 01: I think we would likely take the position. [00:08:39] Speaker 05: Can you explain, though, why it has to result in pervasive consideration of race? [00:08:44] Speaker 01: Sure. [00:08:45] Speaker 05: Why does it have to be pervasive? [00:08:46] Speaker 01: So I think our view is that when you look at this rule, under which, as we understand it, it is not sufficient simply to say we are applying neutral actuarially sound considerations. [00:09:00] Speaker 01: in engaging in the rate making and underwriting process. [00:09:03] Speaker 01: And by virtue of how the burden shifting framework operates, we can be liable even if the alternative practice that a plaintiff comes forward with is not equally effective. [00:09:14] Speaker 01: We therefore have to, the members have to transform their practices. [00:09:18] Speaker 01: And this is set out in some detail in the affidavits, but to give you the Cliff Notes version of how that would take place and ensure would have to [00:09:28] Speaker 01: review its rate making and underwriting process and where it determines that there is a disparate impact, it would have to take race or protected characteristics into account. [00:09:39] Speaker 01: How is that different? [00:09:41] Speaker 01: I think that the rule may not formally require it. [00:09:45] Speaker 01: And that was the sum total of HUD's response in the rulemaking process. [00:09:49] Speaker 01: It was like, look, you can't point to a provision that says you have to consider race. [00:09:54] Speaker 01: There's no formal requirement. [00:09:55] Speaker 01: But our principal objection to Judge Leon's reasoning here is that's not what the Supreme Court required. [00:10:02] Speaker 01: If you look at the relevant language from inclusive communities at 540 and 542, the question is whether or not disparate impact liability [00:10:10] Speaker 01: causes race to be used and considered any pervasive way. [00:10:14] Speaker 05: Of course, if it formally required it, that would- I just ask you, why can't you not do that? [00:10:20] Speaker 05: And once the claim comes up, then you can look at it, and then you can agree or not agree or settle or not settle. [00:10:26] Speaker 05: But why do you have to completely redo the whole underwriting process? [00:10:30] Speaker 05: I don't understand. [00:10:31] Speaker 03: Let me just tell you, consistent with- I didn't mean to interrupt, but I just want to add this on. [00:10:36] Speaker 03: Consistent with what Judge Henderson was suggesting in the first place. [00:10:40] Speaker 03: When I went through this case, my first reaction was, it's not right. [00:10:44] Speaker 03: There's no right claim here. [00:10:48] Speaker 03: There's nothing. [00:10:48] Speaker 03: That's why I asked you, what in the rule compels what you're suggesting? [00:10:54] Speaker 03: And you started by saying, it doesn't. [00:10:56] Speaker 03: And it doesn't. [00:10:57] Speaker 03: And there's never been a lawsuit [00:11:00] Speaker 03: about this, all these many years that this has been this terrible issue that's affecting the industry. [00:11:07] Speaker 03: No one has brought a suit. [00:11:08] Speaker 03: There's been no kind of contest about it. [00:11:11] Speaker 03: And we're having trouble seeing how [00:11:16] Speaker 03: The possibility of liability even arises. [00:11:18] Speaker 03: That's why Judge Henderson asked you about standing. [00:11:21] Speaker 03: I don't see how the case, no matter what, standing or not, to my mind, it is not right for our consideration. [00:11:27] Speaker 03: We do not have, as the Supreme Court said in US v. Texas, you know, there's all kinds of possibilities that may result here. [00:11:36] Speaker 03: If it's ever enforced in any way, let's wait and see how it plays out. [00:11:39] Speaker 01: Sure, so I'm happy to address that Judge Edwards and in the course of that to address Judge Pan's initial question as well. [00:11:46] Speaker 01: So first, this is obviously a pre-enforcement facial challenge. [00:11:51] Speaker 01: We acknowledge that our burden is therefore to show that the rule is invalid in all of its applications. [00:11:58] Speaker 01: I don't understand the government to be framing its any objection here in ripeness terms. [00:12:03] Speaker 03: I don't need the government's. [00:12:04] Speaker 01: Yes, but I understand that it's jurisdictional. [00:12:07] Speaker 01: So therefore, I will address it directly. [00:12:09] Speaker 01: I think that the problem with understanding it in those terms is that it effectively leaves no room for a facial challenge to operate with regard to a challenge to a disparate impact rule. [00:12:21] Speaker 03: I have to stop you here. [00:12:23] Speaker 03: This is why I asked you the first question. [00:12:24] Speaker 03: Facial challenge means I can look at the rule and see your problem. [00:12:28] Speaker 03: None of the three of us looking at the rule can see your issue. [00:12:33] Speaker 03: It's not there when you read the rule and you look at inclusive communities, you can't say, well, wait, what is in the rule that is taking issue with inclusive communities or trying to do something different? [00:12:45] Speaker 03: It's not there. [00:12:46] Speaker 03: And what you're really saying is this might play out badly for us if we get some bad administrators. [00:12:54] Speaker 03: They might bring an enforcement action that's not to our liking. [00:13:00] Speaker 03: And we want to preempt that way in advance. [00:13:02] Speaker 03: exactly why it's not right. [00:13:05] Speaker 01: So I would say two things in response to that Judge Edwards. [00:13:07] Speaker 01: The first is that I think that with respect it slightly misapprehends inclusive communities because I do think that inclusive communities said that the limitation that the court was articulating, which is I think a limitation as a statutory interpretive matter on the availability of disparate impact liability, [00:13:26] Speaker 01: is a limitation that that liability cannot cause race to be used and considered any pervasive way, not that there has to be some formal requirement of that. [00:13:36] Speaker 01: Frankly, if there was a formal requirement, the race be considered, it would probably be unconstitutional. [00:13:43] Speaker 01: I think for purposes of [00:13:44] Speaker 01: of the court's analysis, what the court was saying is you just have to look at the operation of the disparate impact liability framework. [00:13:55] Speaker 01: And that's why we came forward with affidavits explaining how disruptive this would be for the practices of insurance companies. [00:14:04] Speaker 01: And I don't think with respect that it's enough to say, well, look, there haven't been any of these actions. [00:14:10] Speaker 01: If there are these actions, you can deal with them then. [00:14:14] Speaker 01: Obviously, insurance companies, like other regulated parties, are going to immediately seek to conform their practices with the requirements here. [00:14:23] Speaker 01: Now, one of the difficulties with that, Judge Edwards, and I want to bring in our second claim here, is precisely because of the inconsistencies with state law. [00:14:32] Speaker 01: Even if you don't agree with me that we have made a showing here that as a facial matter, there's going to be a problem because of the pervasive consideration of race, because of the way [00:14:42] Speaker 01: the rate making and underwriting process works. [00:14:45] Speaker 01: I think you do have to look at the requirements of state law for purposes of considering the other important limitation that the court imposed, which is the robust causality requirement. [00:14:59] Speaker 01: I think that there is agreement between ourselves and the government, and you'll hear from Ms. [00:15:04] Speaker 01: Marcus in a minute, [00:15:05] Speaker 01: that if you had a situation in which the states outright banned the consideration of race and other protected characteristics, that you would have a problem under the robust causality requirement. [00:15:20] Speaker 05: But in your facial challenge, you have to show that every state in every instance brings that causality. [00:15:25] Speaker 01: Yes. [00:15:26] Speaker 01: And I think that the disagreement between us and the government is about that. [00:15:31] Speaker 01: It is about the operation of state law. [00:15:34] Speaker 01: And we in our brief walk through all 50 states and the District of Columbia. [00:15:39] Speaker 01: And we point out that many, many states affirmatively explicitly prohibit the consideration of race and other protected characteristics. [00:15:48] Speaker 01: Other states do so by prohibiting unfairly discriminatory rates and the like. [00:15:53] Speaker 01: And further, the states have affirmative provisions that [00:15:59] Speaker 01: set out the factors that insurers can consider in the rate-making and underwriting process. [00:16:06] Speaker 01: And again, remember, going back to what the Supreme Court said in inclusive communities, that all that we have to show is that another source of law, quote, substantially limits the defendant's discretion for purposes of breaking the causal connections. [00:16:21] Speaker 03: Even if a viable case comes up, when something becomes right, that would be the argument you'd make. [00:16:27] Speaker 01: Well, I think what was a little bit confusing about Judge Leon's reasoning is that Judge Leon seemed to suggest that even if state law could always sever the causal connection, that we would have to wait another day. [00:16:42] Speaker 01: We would have to wait to raise state law as a defense. [00:16:46] Speaker 01: And again, I think that that really, Judge Edwards leaves no room for a facial challenge to operate here. [00:16:51] Speaker 01: And I acknowledge that it is our burden under Hodge versus Tolkien and all of the other familiar cases [00:16:57] Speaker 01: to show inconsistency in every application with regard to both of these arguments. [00:17:03] Speaker 01: But again, I think that we have successfully done so. [00:17:06] Speaker 01: And again, we point to compliance costs. [00:17:09] Speaker 05: I don't think we really address this pervasiveness question and why it has to be a pervasive consideration of race. [00:17:16] Speaker 05: And I'm wondering if you might be able to put this in a concrete example. [00:17:21] Speaker 05: So for example, there's been a claim that's been referenced [00:17:25] Speaker 05: in the materials about a claim that insurers are not providing insurance to properties that accept Section 8 housing vouchers. [00:17:34] Speaker 05: So can you explain how your theory of pervasive consideration of race fits into a situation like that? [00:17:44] Speaker 01: Sure. [00:17:45] Speaker 01: So that, I think, is the fact pattern, basically, of inclusive communities itself. [00:17:51] Speaker 01: And I think it involved landlords who did not accept Section 8 vouchers. [00:17:57] Speaker 05: No, that was where they're going to locate something. [00:17:59] Speaker 05: I thought that's what inclusive communities was about. [00:18:02] Speaker 05: Or am I mixing that up with another case? [00:18:04] Speaker 01: Yeah, I'm not sure. [00:18:05] Speaker 01: But I'm sort of happy to address this in a specific context. [00:18:08] Speaker 01: So let's say that insurers take [00:18:12] Speaker 01: some factor into account in the rate making and underwriting process. [00:18:16] Speaker 01: For instance, you know, I'm slightly going to say sections of such section eight vouchers. [00:18:21] Speaker 05: That's the that's the example. [00:18:24] Speaker 01: Yeah. [00:18:24] Speaker 01: So whatever factor it is, I think insurers would then have to assess whether or not that practice has a disparate impact based on race or other protected characteristics, because that is, after all, [00:18:41] Speaker 01: the substantive legal standard that is being challenged. [00:18:44] Speaker 05: But it's not a pervasive look in this particular instance, is it? [00:18:48] Speaker 05: Because I thought you were saying that it's going to require the companies to redo the entire way they assess risk. [00:18:55] Speaker 01: Well, I think what would happen, Judge Pan, is that for that factor or any other factor, say it is whether the house is in a low-lying area, whether the house has a sloping roof or a flat roof, with regard to each of those actuarially sound [00:19:11] Speaker 01: And insurer would have to consider whether that has a disparate impact on multiple axes, not only with regard to race, but with regard to all of the other stated protected characteristics. [00:19:21] Speaker 01: If it does, the insurer would presumably have to take those factors into account and essentially redo the rate making, the classification, and the grouping process in order to come up with a process that was compliant with the legal standards. [00:19:37] Speaker 05: So how would it work then in my example? [00:19:39] Speaker 05: Why couldn't it be that once there's a challenge to this policy, then they could look at it and see if there's something else they could do different. [00:19:48] Speaker 05: Just charge a higher premium, for example, for a property or whatever. [00:19:52] Speaker 05: But why would it have to, I guess, happen at the front end and be pervasive as opposed to just case by case? [00:19:57] Speaker 01: Well, I think that I think the alternative is to basically say, you should just violate the law and wait to be sued. [00:20:04] Speaker 01: And then when you were sued, you can change your practices. [00:20:06] Speaker 03: You assume so many things that are not here. [00:20:09] Speaker 03: That's what's so frustrating. [00:20:10] Speaker 03: And I mean, I don't mean to look frustrated, but I am frustrated. [00:20:14] Speaker 03: When you say facial challenge, like, Judge, please don't take that opportunity away from us. [00:20:19] Speaker 03: A facial challenge means I look at the document facially. [00:20:25] Speaker 03: And I look at one, four, and six, and I say, those requirements are inconsistent with law. [00:20:31] Speaker 03: The things that you are worrying about aren't stated in the document that you want to challenge. [00:20:37] Speaker 03: That's why my reaction is, this is not right. [00:20:42] Speaker 03: You can't point to anything to support a facial challenge, because there's nothing in the regulations that is directly inconsistent with inclusive communities. [00:20:52] Speaker 03: You might get a bad judge. [00:20:54] Speaker 03: You might get a bad appellate court later on that goes the wrong way, and then you have to fight it out. [00:20:59] Speaker 03: But facially, it's not there. [00:21:00] Speaker 03: That's why US v. Texas is precisely the case. [00:21:03] Speaker 03: You need to look at it again. [00:21:04] Speaker 03: This precourt says, yes, you can come up with all kinds of hypotheticals that seem worrisome to you, but we're not going to guess now. [00:21:12] Speaker 03: Let's see if you run into a problem later. [00:21:14] Speaker 01: I mean, Judge Edwards, I would respectfully disagree. [00:21:17] Speaker 01: But even if you take that view, [00:21:19] Speaker 01: And leaving aside for the moment, that's the Supreme Court. [00:21:22] Speaker 01: Well, even if that is the Supreme Court, let me explain why I think we would still satisfy that approach. [00:21:31] Speaker 01: Now, I want to put aside for the moment our view that it will not surprise you to hear that our clients view is that any application of disparate impact liability to rate making and underwriting procedures is going to cause a problem for the reasons that Judge Pan and I were discussing. [00:21:47] Speaker 01: Let's put that aside for a moment. [00:21:48] Speaker 03: Let's look at the operation in this case, whether impact, a disparate impact can cover your clients. [00:21:55] Speaker 03: Is that an issue in this case? [00:21:56] Speaker 03: Well, I mean, I make that really wait because you didn't really answer Judge Pan initially. [00:22:00] Speaker 03: That's not an issue in this case. [00:22:03] Speaker 01: Well, so we are challenging the 2023 rule and one of the effects challenging your view of the rule. [00:22:12] Speaker 03: And one of the things that my colleague asked you is, are you challenging the inclusion [00:22:17] Speaker 03: of your clients under the impact and you said, no, that's right. [00:22:22] Speaker 03: You're not. [00:22:23] Speaker 03: So this is why this makes no sense. [00:22:26] Speaker 03: What we're doing here. [00:22:27] Speaker 01: So just to be clear, we have [00:22:30] Speaker 01: consistently taken the position. [00:22:33] Speaker 01: Our view is that the imposition of disparate impact liability on these processes is improper. [00:22:38] Speaker 01: We obviously raise that issue in our objection. [00:22:41] Speaker 01: And I do think that one way in which the 2023 rule clarified the law was to reject our argument for an exemption and to extend disparate impact liability unambiguously, even to rate making and underwriting processes. [00:22:56] Speaker 01: I recognize that the two claims that we are making here are first. [00:22:59] Speaker 01: that the 2023 rule requires a pervasive consideration of race, and second, that it fails the robust causality requirement. [00:23:06] Speaker 01: And I want Judge Edwards to go directly to your question about, with regard to the pervasive consideration of race, what is so problematic about this rule? [00:23:15] Speaker 01: And I would juxtapose this rule to the 2020 rule. [00:23:19] Speaker 01: precisely because this rule pushes the boat out about as far as it can with regard to the operation of burden shifting. [00:23:28] Speaker 01: And I would point to a couple of features that I think are particularly problematic. [00:23:32] Speaker 01: And so if you're looking at this in terms of what is it about the rule in particular that causes the pervasive consideration of race, I would point to two features. [00:23:41] Speaker 01: The first is, and if you look at the second step of the burden shifting framework, it says that the defendant has to show that a challenge practice is necessary to achieve [00:23:49] Speaker 01: one or more substantial, legitimate, non-discriminatory interests. [00:23:54] Speaker 01: And one might very well wonder exactly what that means, but I think that what it means, and you can ask Ms. [00:24:00] Speaker 01: Marcus this question when she gets up here, is that it isn't enough just to say, these are actuarially sound, [00:24:07] Speaker 01: protected characteristic neutral justifications that what we're doing is what we have always done, which is to rely on actuarially sound factors in the rate making and underwriting process. [00:24:19] Speaker 01: Now, second, and I think that this may be perhaps the most pernicious part of this, [00:24:25] Speaker 01: The plaintiff can prevail at the third step, and this is also incorporated in the substantive standard in the previous subsection, that, quote, the interest supporting the challenge practice could be served by another practice that has a less discriminatory effect. [00:24:41] Speaker 01: So it is not that the plaintiffs have to show, as was true under the 2020 rule, that the alternative policy is equally effective. [00:24:49] Speaker 01: It can be that we can be held liable [00:24:51] Speaker 01: even if the alternative is less effective. [00:24:57] Speaker 01: That in other words, if it doesn't serve the actuarial considerations that underlie the rate making process, simply because the alternative has less of a disparate impact. [00:25:08] Speaker 03: And so this is- If you won this case and you were allowed to write the opinion, what would your remedy be? [00:25:15] Speaker 03: What would we say? [00:25:16] Speaker 03: You are now awarded what? [00:25:19] Speaker 03: You won. [00:25:21] Speaker 03: your facial challenge and here's what you're getting. [00:25:25] Speaker 01: You should vacate the rule in so far as it applies to insurers rate making and underwriting practices. [00:25:32] Speaker 01: And I think that would be a remedy that would address the concern we're raising. [00:25:36] Speaker 01: We're not saying that you should vacate the rule as it applies to all insurer practices. [00:25:41] Speaker 01: You can have other practices with regard to certain pricing discounts or redlining and the like. [00:25:47] Speaker 01: I think someone could even bring a challenge if they wanted to, to practice like bundling. [00:25:53] Speaker 01: So in other words, we're not asking for an exemption for insurers from all practices. [00:25:58] Speaker 01: And that is, I think, the pretty standard APA remedy for a facial challenge like this one. [00:26:04] Speaker 01: Now, of course, we're operating against the backdrop of the fact that there's a very real likelihood [00:26:09] Speaker 01: that the 2023 rule will be modified or even superseded once again when the new administration comes in in January. [00:26:19] Speaker 01: And all I can say about that is that this litigation illustrates the fact that there has been a ping pong on this issue across administrations. [00:26:29] Speaker 01: I certainly think that a rule like the 2020 rule would reduce the consideration of race because I think that as a practical matter, [00:26:37] Speaker 01: This is something of a spectrum. [00:26:39] Speaker 01: The more onerous the disparate impact liability standard is, the more as a practical manner that insurers are going to have to take race into account. [00:26:49] Speaker 05: In your view, is there anything that we should do to account for the real fact that you have raised that there is going to be a change in administrations? [00:26:59] Speaker 05: The prior Trump administration adopted a very different rule. [00:27:05] Speaker 05: Perhaps ask the government to state its position with respect to this case on. [00:27:09] Speaker 05: by February 15th or something like that? [00:27:12] Speaker 01: I think that would be a very practically reasonable thing for the court to do in light of the fact that the new administration will be coming into office two months from today. [00:27:23] Speaker 01: And I think that the court could promptly issue an order asking the government to state its intentions at that point, recognizing the reality that whatever this court ends up doing, there is a very real prospect of that change. [00:27:39] Speaker 01: And I do think that if the court does that, it should set a relatively prompt deadline for the government to state its views as to how it wants to proceed. [00:27:49] Speaker 03: And if we dismiss for want of ripeness, that would have the same result, and it would be legally cognizable. [00:27:56] Speaker 03: It would be something I understand, and we do it all the time, and your position would not be hurt. [00:28:03] Speaker 03: because that is a dismissal without prejudice. [00:28:06] Speaker 03: We're saying it's not a case that's properly before us. [00:28:09] Speaker 03: And then whatever it is the government does or doesn't do, they'll do or don't do, and then you may be where you want to be eventually. [00:28:16] Speaker 03: I want to do it in a way that I understand that we are required to do as judges on this court. [00:28:22] Speaker 03: This case is not right. [00:28:23] Speaker 01: Judge Edwards, I think what I would say is that I do think that it is telling that the government is not making that argument before this court. [00:28:31] Speaker 03: It's not the first time that that's happened. [00:28:33] Speaker 03: The government has lost along with parties on your side of the table. [00:28:37] Speaker 01: But I think I would also say that I think that we have done precisely what should be done in a facial challenge. [00:28:44] Speaker 01: when the substantive standard is a standard like the one that the court articulated in inclusive communities. [00:28:50] Speaker 01: Remember the concern that motivated those last few pages of Justice Kennedy's opinion in inclusive communities. [00:28:57] Speaker 01: It was the long stated concern that too expansive of a disparate impact standard [00:29:02] Speaker 01: could raise constitutional concerns. [00:29:05] Speaker 01: And that is why the court recognized these guardrails on disparate impact liability. [00:29:10] Speaker 01: And those guardrails, Judge Edwards, require you to look at the practical operation of the provisions. [00:29:17] Speaker 01: And it was for that reason that we came forward, as Judge Henderson indicated, with the 15 declarations that explain in unrebutted terms the operation of the rate-making and underwriting process and the disruptive effects of this rule. [00:29:33] Speaker 01: I don't think that there was anything more that we could do, and that's why. [00:29:36] Speaker 02: Those were all tied to this collection of data, which nobody, not only nobody has required, but has frowned on. [00:29:46] Speaker 01: Well, I think what I would say, Judge Henderson, about that is two things. [00:29:50] Speaker 01: First, that to the extent that the government sets great store by the fact that there have been no enforcement actions by the government and relatively few [00:30:00] Speaker 01: private actions in this intervening period. [00:30:03] Speaker 01: I think that is precisely because of this lingering uncertainty about the law that we've had over the last decade, where there have been challenges both here and in the district court in Chicago on precisely these grounds and others. [00:30:18] Speaker 01: But I think that the second thing that I would say about this is that I think that as a practical matter, [00:30:27] Speaker 01: This is the reason why we aren't able to come forward and say, we are collecting this data today and analyzing this data today, is precisely because the members are in a complete bind here. [00:30:41] Speaker 01: The members are subject to these state law prohibitions. [00:30:45] Speaker 01: If you look, for instance, at the declaration of Juneau Thames, which is at pages 72 to 75 of the Joint Appendix, that company, Harford, operates in Maryland, where there is a specific prohibition [00:30:57] Speaker 01: on the collection of data of this variety. [00:30:59] Speaker 01: And so in some sense, the problem that the insurers have right now is the complete uncertainty about the law, which is where our second argument comes in. [00:31:08] Speaker 01: We believe that there is a conflict in every application between federal law and state law. [00:31:13] Speaker 01: And Judge Edwards, you can look at the terms of the laws to make that determination. [00:31:19] Speaker 01: And all that the government has to offer [00:31:21] Speaker 01: is the say-so of certain state attorneys general that certain states permit disparate impact liability without any authorities for the proposition that disparate impact liability has been applied to homeowners insurers in this context. [00:31:34] Speaker 01: So even if you take the most stringent view that you're only going to look at the four corners of the United States code and state codes, we would prevail on our second claim under that approach. [00:31:46] Speaker 01: Unless the court has any further questions, I'll reserve the balance of my time for rebuttal. [00:31:50] Speaker 01: Thank you. [00:31:51] Speaker 02: Thank you. [00:31:54] Speaker 02: Ms. [00:31:54] Speaker 02: Marcus. [00:32:00] Speaker 04: Thank you. [00:32:01] Speaker 04: Good morning. [00:32:02] Speaker 04: I'm Stephanie Marcus from the Department of Justice, and I represent Appellee's HUD and the Acting Secretary of HUD. [00:32:10] Speaker 04: I'm going to start with standing and ripeness. [00:32:13] Speaker 04: We believe that this case [00:32:16] Speaker 04: should be dismissed for lack of jurisdiction because the plaintiffs do not have standing and because it is not right. [00:32:27] Speaker 04: As Judge Henderson, your questions reflect, the plaintiff here has not shown that any of its members have an actual or imminent injury, in fact, at all, much less one that is traceable to the 2023 rule. [00:32:46] Speaker 04: The 2023 rule reaffirmed the burden shifting approach that was first adopted in 2013. [00:32:53] Speaker 04: And in 11 years, the members have not come forward with anything. [00:32:59] Speaker 04: They only have speculation that they will do this in the future. [00:33:05] Speaker 04: But as your honors had pointed out in the rule itself, [00:33:10] Speaker 04: HUD expressly disavowed a requirement that anyone has to collect data or use data. [00:33:18] Speaker 05: But aside from the data collection theories, there's a theory that they are a regulated party. [00:33:24] Speaker 05: And this rule subjects them to more liability than an alternative version of the rule, like the 2020 rule would. [00:33:31] Speaker 05: And it's also more stringent than some of the other burden shifting tests that some of the circuits had previously adopted. [00:33:37] Speaker 05: So why is it that enough? [00:33:39] Speaker 04: As this court has made clear in a number of the cases we cited in our supplemental brief, including the American Chemistry Council and the National Association of Home Builders cases against EPA and the U.S. [00:33:52] Speaker 04: Corps of Army Engineers, just being a regulated [00:33:56] Speaker 04: That's the object of regulation is not enough. [00:33:58] Speaker 04: They're still that doesn't eliminate. [00:34:01] Speaker 05: The increase in liability to them is a combination of the two that they this would be the argument they would make that they are subjected to more liability under this version of the rule than, for example, the twenty twenty version of the rule. [00:34:14] Speaker 05: So there are different. [00:34:17] Speaker 05: There are different ways of imposing a standard that implements the FHA's disparate impact framework. [00:34:24] Speaker 04: I think that the rule doesn't increase the substantive liability under the Fair Housing Act. [00:34:33] Speaker 04: It doesn't expand liability in any sense from the statute itself. [00:34:38] Speaker 04: HUD is not purporting to decide. [00:34:41] Speaker 04: Let's put it this way. [00:34:41] Speaker 05: It's more for them to prove liability or not under this framework than the alternative frameworks that are available. [00:34:50] Speaker 04: I mean, the plaintiff has to prove the liability. [00:34:53] Speaker 04: They just need to defend. [00:34:57] Speaker 04: But they haven't shown that because they haven't shown any that, again, they actually pointed out in their reply brief that there's never been [00:35:06] Speaker 04: government enforcement in court against a homeowner insurer. [00:35:11] Speaker 04: And with the lack of any kind of imminent government enforcement, here it's just a sort of way that HUD administratively will deal with the claims in the administrative process. [00:35:27] Speaker 04: An insurer always has the option to go to federal court. [00:35:30] Speaker 04: there is, if there's a complaint, administrative complaint filed. [00:35:35] Speaker 04: You're saying they can't make a facial challenge. [00:35:37] Speaker 05: There's no way in which they can do so. [00:35:38] Speaker 05: They can only make an as applied challenge. [00:35:41] Speaker 04: I'm not, I mean, if they're in the future, a party could show some sort of injury. [00:35:47] Speaker 04: I'm just saying in this case, they cannot make a facial challenge because they haven't shown a stand. [00:35:52] Speaker 05: You're saying that insurers. [00:35:54] Speaker 05: Insurers. [00:35:55] Speaker 05: Subject to this. [00:35:57] Speaker 05: this rule cannot make a facial challenge. [00:36:00] Speaker 05: They will never be able to show injury by this rule. [00:36:06] Speaker 04: I'm sorry, Your Honor. [00:36:08] Speaker 04: I don't think I need to show that they would never. [00:36:10] Speaker 04: I'm just saying on the record of this case, they haven't shown an injury. [00:36:14] Speaker 04: I don't know if an insurer in the future could show an injury, but there's nothing on this record. [00:36:19] Speaker 05: But if they have to spend any money to [00:36:22] Speaker 05: No. [00:36:23] Speaker 05: So comply with this rule by saying, well, now we're going to have to look at this a little bit differently. [00:36:28] Speaker 05: I know that there's an argument that, well, it's coextensive with the FHA. [00:36:32] Speaker 05: But given that there are different standards that are also permissible apparently under the FHA, this particular one is going to require them to maybe be more careful in documenting their work than others. [00:36:45] Speaker 04: No. [00:36:46] Speaker 04: And I think the problem is that they can come into court [00:36:51] Speaker 04: and argue what they think the FHA burden shifting framework should be. [00:36:57] Speaker 04: And that's what you're saying. [00:37:00] Speaker 05: Again, you're saying they cannot do it. [00:37:02] Speaker 04: And they have not. [00:37:03] Speaker 04: And because they haven't shown that this will cause them any kind of cost, it's that they won't conduct their business any differently. [00:37:16] Speaker 04: And it's also not right because these [00:37:19] Speaker 04: Right now. [00:37:20] Speaker 05: Well, there are all these affidavits that say they're going to conduct their businesses differently. [00:37:25] Speaker 04: But they don't, they just don't even give a time when they're going to do that. [00:37:30] Speaker 04: And the rule has been in effect for 11 years. [00:37:34] Speaker 04: I don't see how that harm can be imminent. [00:37:36] Speaker 04: They didn't update the affidavits. [00:37:40] Speaker 04: And they haven't shown today how it's different now. [00:37:47] Speaker 03: Taking the best I can figure out from their argument, they're suggesting that because of the change in rules, actuarial practices are now more directly implicated in ways that they were not before. [00:38:00] Speaker 03: That's the best I can get from what they're saying. [00:38:02] Speaker 03: And that piece of it they're saying, the actuarial practices would now be subject to [00:38:10] Speaker 03: potential liability under their view of the rule and this is different from what existed before and it imposes a burden on them now to get ready for that possibility. [00:38:22] Speaker 04: Your honor, they can't show that it's different from what it was before because the 2020 rule never went into effect. [00:38:31] Speaker 04: It was actually enjoined before it became effective by a district court in Massachusetts. [00:38:36] Speaker 04: So the 2013 rule has remained in effect. [00:38:41] Speaker 04: And so they haven't shown that there's been a change in the standards that they're subject to or that there's been an increase in liability. [00:38:55] Speaker 04: But in any event, they [00:38:59] Speaker 04: They haven't shown how a rule that doesn't have a substantive requirement. [00:39:06] Speaker 04: I think it's easy to see the problem with their standing and rightness when you look at the regulated party cases that the district court relied on in its first opinion and finding standing and how different they are. [00:39:21] Speaker 04: If you have, for example, a petrochemical manufacturer [00:39:26] Speaker 04: who is subjected to new pollution standards. [00:39:30] Speaker 04: That's a substantive requirement that that manufacturer is sub. [00:39:35] Speaker 04: And so by the rule itself, it affects a regulated party. [00:39:40] Speaker 04: Same for someone who operates a water system. [00:39:44] Speaker 05: So why isn't the change not from the 2020 rule to the 2023 rule, but just the 2013 and the 2023 standard versus what happened before? [00:39:55] Speaker 05: And because there is this argument that this is coextensive with the FHA. [00:39:58] Speaker 05: But I don't think it necessarily is, because there are different versions of the rule that could comply with the FHA. [00:40:04] Speaker 05: And so then it's just a question of, they're insurers, right? [00:40:10] Speaker 05: So they're risk assessors. [00:40:13] Speaker 05: So they're going to have to do something to comply with litigation risk in light of the standard that they're going to have to meet if they're sued. [00:40:20] Speaker 05: And they're going to have to, [00:40:22] Speaker 05: I don't know that it has to be a pervasive consideration of race, but they're going to probably make some adjustments to the way to set their policies based on this rule. [00:40:32] Speaker 05: And why isn't that enough? [00:40:33] Speaker 05: Because they're a regulated party that's subjected to the standard. [00:40:36] Speaker 04: Because to the extent they would do that, that would be because of the Fair Housing Act itself and because of inclusive communities. [00:40:44] Speaker 05: No, but not because this is different. [00:40:46] Speaker 05: There are different ways of doing this that are consistent with both inclusive communities and the FHA. [00:40:50] Speaker 05: I mean, it's subject to debate, but there was the 2020 one. [00:40:54] Speaker 05: You could have a rule, because inclusive communities has that language about it has to be something that's arbitrary and unnecessary. [00:41:00] Speaker 05: You could have a rule that says plaintiffs should show at step one it's arbitrary and unnecessary. [00:41:04] Speaker 05: There are lots of ways to comply with the FHA and inclusive communities that are not this standard. [00:41:10] Speaker 05: But this is the one that the agency adopted, and they're subject to it. [00:41:14] Speaker 05: So why don't they have standing? [00:41:15] Speaker 04: They're subject to it, but they will have a chance in any given case to argue de novo in court. [00:41:24] Speaker 05: They can't challenge it as a facial challenge. [00:41:27] Speaker 05: It has to be as applied in your view. [00:41:29] Speaker 05: But I don't see why that's the case if they have standing to challenge it as a facial challenge based on what I just said. [00:41:36] Speaker 04: And they don't. [00:41:37] Speaker 04: And we think they don't have standing, because what is, they need to show that some difference in a burden shifting framework would cause them to act differently. [00:41:48] Speaker 04: And this burdenship- Well, we have all these activists that say that they will. [00:41:52] Speaker 05: It might not be pervasive, but they're risk managers, and they're going to do stuff to make sure that they're in compliance. [00:41:58] Speaker 04: But then when are they going to do it? [00:42:00] Speaker 04: I mean, this has been the same. [00:42:01] Speaker 04: HUD was just reaffirming a standard that it first adopted in 2013. [00:42:07] Speaker 04: And even if theoretically there could be some different, and there is, I mean different circuits have slightly different frameworks. [00:42:15] Speaker 04: And that's still, they haven't come forward with an affidavit saying that they're doing things differently. [00:42:24] Speaker 04: One example, it's the Second Circuit actually held that the Supreme Court implicitly adopted the HUD burden shifting framework in inclusive communities. [00:42:34] Speaker 04: Has have they come forward with a member within the 2nd circuit that has done something differently since then or has incurred costs or started pervasively considering race no. [00:42:49] Speaker 04: And the rule doesn't require it. [00:42:51] Speaker 04: And they just simply don't have standing. [00:42:54] Speaker 04: And it's not right for a lot of the same reasons why their facial challenge fails. [00:42:59] Speaker 04: Because a lot of the objections they're bringing up, they can argue an individual case. [00:43:03] Speaker 04: But it's their burden to show that in every case, they would be required to pervasively consider race. [00:43:12] Speaker 04: Judge Bates, I think your honor was referring to Judge Bates' decision in 2017 in the Travelers case with the Section 8 housing. [00:43:20] Speaker 04: He denied a motion to dismiss on the insurer's behalf. [00:43:26] Speaker 04: And since that case, they haven't come forward and said, you know, we're doing something differently. [00:43:31] Speaker 04: Also an important point in that case, he also refused to dismiss the D.C. [00:43:39] Speaker 04: law claim. [00:43:40] Speaker 04: And that's an example where it was allowed to go forward. [00:43:44] Speaker 04: The case ultimately settled. [00:43:46] Speaker 04: But all of these dire predictions of the insurance companies have not come to pass. [00:43:53] Speaker 04: And we have the Prudential case was in 2002. [00:43:56] Speaker 04: We have the Viennes case in Connecticut that involved a Connecticut claim and a federal claim under the FHA. [00:44:03] Speaker 05: Can you address the impending change of administrations and [00:44:06] Speaker 05: What's the most efficient way for us as a court to deal with this? [00:44:10] Speaker 04: Well, I think, Your Honor, because our position is that the court does not have standing and the case isn't right, I think that isn't affected, that position. [00:44:24] Speaker 04: And I think it's up to the court. [00:44:26] Speaker 04: I mean, of course, we are defending the rule and fully defending it. [00:44:31] Speaker 04: And that is clearly our position now, and the court [00:44:36] Speaker 04: knows that this administration is still here through January 2025. [00:44:41] Speaker 05: I just think in this particular case, we actually have a Trump era rule that is different from this one, which is a strong indication that there's going to be a change of policy in this case, potentially. [00:44:56] Speaker 05: And for us to expend the resources to decide this case, whether even on the basis of standing, et cetera, it's a lot of resources. [00:45:05] Speaker 03: Do you think the rule affects actuarial practices, says anything about it? [00:45:10] Speaker 04: No, I don't. [00:45:11] Speaker 04: Well, let me modify that. [00:45:13] Speaker 04: It makes clear that it is not in any way like trying to prohibit risk-based or actuarial practices. [00:45:24] Speaker 04: It, in fact, says that HUD recognizes that those are legitimate nondiscriminatory practices. [00:45:32] Speaker 04: And it's not trying to, you know, [00:45:34] Speaker 04: do away with those kind of practices. [00:45:37] Speaker 04: But it certainly does not prohibit them in any way or restrict them. [00:45:44] Speaker 04: If the court has no further questions, we would ask that it remand the district court to dismiss for lack of jurisdiction or affirm the district court's decision. [00:45:55] Speaker 04: Thanks. [00:45:58] Speaker 02: Does he have any time left? [00:45:59] Speaker 02: Why don't you take two minutes? [00:46:02] Speaker 01: Great. [00:46:02] Speaker 01: Thank you, Judge Henderson. [00:46:04] Speaker 01: Just very briefly on the justiciability arguments, I think a helpful way to think about this is to characterize the 2023 rule as essentially creating a duty, a duty not to engage in practices that create a disparate impact where other less discriminatory alternatives are available, even if those alternatives are not equally effective. [00:46:28] Speaker 01: And our affidavits [00:46:30] Speaker 01: showed that the only way to comply with that duty is to modify our practices. [00:46:36] Speaker 01: And that is why there is self-evident standing. [00:46:39] Speaker 03: You're talking about actuarial practices? [00:46:41] Speaker 01: Yes. [00:46:41] Speaker 03: I don't think that's what the rule says. [00:46:43] Speaker 03: That's exactly my concern. [00:46:45] Speaker 03: You are self-servingly pressing that point as if it's self-evident. [00:46:50] Speaker 03: When I looked at it initially and listened to this argument for over an hour, that is not what the rule says to me. [00:46:56] Speaker 03: Even when you shift up and down in the board, [00:46:59] Speaker 03: Because it would not be, in my view, a discriminatory practice to have the usual business actuarial practices in place for an insurance company to make determinations. [00:47:12] Speaker 03: I think your argument is bogus. [00:47:13] Speaker 03: To be very honest with you, I really get your concern as business people. [00:47:18] Speaker 03: And I understand what you're worrying about. [00:47:20] Speaker 03: But this case just doesn't present anything. [00:47:23] Speaker 03: Because the rule doesn't say that those actuarial practices are in jeopardy. [00:47:28] Speaker 03: It does not say that. [00:47:29] Speaker 01: And I think that ultimately that is where I have to disagree respectfully with you, Judge Edwards. [00:47:34] Speaker 01: I don't think that inclusive communities itself requires a formal requirement. [00:47:39] Speaker 01: It does not require the rule or the underlying statute somehow affirmatively to operate on actuarial practices or to require the consideration of race. [00:47:52] Speaker 01: And I do think that the colloquy between Judge Pan and my friend, Ms. [00:47:56] Speaker 01: Marcus, [00:47:57] Speaker 01: illustrated the problem here. [00:47:58] Speaker 01: If you take that view to its logical conclusion, I don't think that there is any room for a facial challenge to operate in this context. [00:48:06] Speaker 01: Any argument would have to be as applied. [00:48:09] Speaker 01: And that is why I think that this is the paradigmatic context in which we are a directly regulated party. [00:48:14] Speaker 03: That's a bad thing, you think? [00:48:15] Speaker 03: We do that all the time. [00:48:17] Speaker 03: There are lots of cases where you can't get a facial challenge. [00:48:20] Speaker 03: Why is that? [00:48:23] Speaker 01: I think it would be true with regard to any challenge of this variety to a disparate impact rule that transgresses the bounds imposed by the Supreme Court and getting we're just not seeing. [00:48:36] Speaker 03: We're not on the same page in our understanding of rightness. [00:48:40] Speaker 03: And if you read, I urge you to read US v. Texas, the Supreme Court said, we're not going to guess about the possibilities. [00:48:47] Speaker 03: We'll see how it plays out, which would be irresponsible for a court to do that. [00:48:51] Speaker 03: And that's exactly what I'm saying, especially for someone like me, who can't comprehend your argument that actual warial practices will fail, either under the law, the Supreme Court statement, or the rule. [00:49:05] Speaker 03: Well, Judge Edwards, I think that seems to be your only concern. [00:49:09] Speaker 03: I think we're talking about this case now. [00:49:11] Speaker 01: I think we're talking about two slightly different things here. [00:49:13] Speaker 01: And while I think Ms. [00:49:14] Speaker 01: Marcus admirably tried to embrace your suggestion that there is a rightness problem here, I start from the proposition that with regard to standing, we are directly regulated parties here and with regard to rightness. [00:49:28] Speaker 01: I think that the problem here, and I don't want to belabor this. [00:49:31] Speaker 01: If you disagree with me, we'll have to agree to disagree. [00:49:34] Speaker 01: But my view on rightness is that in this context, we're bringing a facial challenge. [00:49:40] Speaker 01: It is entirely permissible. [00:49:42] Speaker 01: And I'd go all the way back to Abbott Labs on this score to come forward with evidence as to how the rule is going to affect our practices. [00:49:51] Speaker 01: We do not have to show [00:49:52] Speaker 01: that has already taken place. [00:49:55] Speaker 01: I want to say just a word about the substance of the claims here, and I will be very brief, mindful of the time. [00:50:00] Speaker 01: I want to say a word about the Travelers case, which I think is the case that you were perhaps thinking of Judge Pan when you asked your question. [00:50:08] Speaker 01: We recognize that there may be certain practices by insurers that fall outside the category of rate-making and underwriting practices. [00:50:17] Speaker 01: I gave the example of redlining. [00:50:19] Speaker 01: And so, for instance, if you had an insurer who, after the rate-making and underwriting process said, we refuse to provide policies to people who have Section 8 vouchers, or we refuse to underwrite policies in a particular neighborhood, those challenges could still go forward. [00:50:36] Speaker 01: Our view is, with regard to the pervasive consideration of race, [00:50:39] Speaker 01: that the features of the 2023 rule that we have been discussing are what takes us to the end of the spectrum where the consideration of race is particularly pervasive. [00:50:48] Speaker 01: The Supreme Court and inclusive communities seem to think that there were certain types of disparate impact liability that would be OK and certain types that would transgress the limit by going too far in mandating the consideration of race. [00:51:02] Speaker 01: And we think that the 2023 rule is on that end of the spectrum. [00:51:07] Speaker 01: And again, I certainly think that it would be appropriate for this court to wait the short period of time to see what the new administration wants to do before ruling on this case. [00:51:16] Speaker 01: We would ask that the judgment of the district court be reversed. [00:51:19] Speaker 01: Thank you.