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"stt_transcript": "Mr. Shaw, you may begin when you're ready. Thank you, and may it please the court. Judge Carter's preliminary injunction requires HUD to continue relying on LASA to allocate and manage hundreds of millions of dollars in federal funds even though the district court largely accepted the extensive evidence of LASA's malfeasance. In fact, LASA's problems are so severe that Los Angeles County, which together with the City of Los Angeles, created LASA, has already withdrawn over $300 million. I don't think that's really the issue, and I don't think that was the district court's issue as well. The concern really is the timing of it and where that leaves LA DOT and Los Angeles. So let me ask you this. Between April and the time that you decided to suspend LASA, what new information came to the government's attention? I know that there were a couple of audits and reports done in May, but it's not clear to me from the record what information in those audits that was new, instead of information that went back years and that were known to HUD. Well, I do think that the two May audits that we referred to in our brief did confirm that the issues that had been identified continued to persist, and there was also, very importantly, a new OIG investigation that was launched into whether LASA had violated federal laws. And in fact, it is pending that investigation that LASA was suspended. I would just also say that, you know... Let me have you pause there, because I want to make sure I understand your answer. So it's the same problems that have persisted, and the OIG investigation is the new information. Is that what you're saying, Mr. Shaw? Well, it's a confirmation of continuing problems. So this is not a case in which, for example, there was a long-ago instance of misconduct, and the government is just acting now. You know, it's confirmation that problems, that severe problems, continue to exist with LASA, and that, in conjunction with the OIG investigation, you know, prompted HUD to act. But again, the question here is not whether HUD had adequate evidence to act at some prior point in time. I mean, what's under review is the... or what Judge Carter enjoined is the suspension of LASA that occurred on June 11th. So the question is whether there was adequate evidence to support that suspension, and whether Judge Carter erred in his analysis in concluding that the suspension was arbitrary and capricious. So again... Part of the language of the statute requires, and I think you sort of just mentioned part of it, which is whether there's adequate evidence to justify an immediate suspension. So I think I'm also interested in understanding what really changed that led the government to decide that the suspension needed to be immediate, which is part of the statutory requirement. I do agree with your honor that there is a requirement that the government have... that the government determine that immediate action is necessary to protect the public interest. And in fact, HUD did so. But there, again, the question is not what evidence has changed, but whether at the time the decision was made, which was on June 11th, there was reason to conclude that immediate action is necessary to protect the public interest. And HUD laid that evidence out extensively in its June 11th letter. It said that immediate action is necessary to protect the public interest. And furthermore, that in light of the fact that LA County had suspended over $300 million of funding to LAHSA, thereby requiring significant staff reductions to LAHSA... Hold on. When did that happen? Let's see. I think the decision might have been made earlier, but the effective date of the suspension was just this summer. I believe it's either June or July. So that was after April. So that's one thing that happened after April. Yes, that's right. The funding from LA County ceased after April. And what's LA City's status? I thought the city also was saying they may take away funding. Yes, I think that the City Council has discussed taking away LAHSA's funding. I know Mayor Bass has suggested in the press that LAHSA is dysfunctional and that the city should stop funding to LAHSA. Has the City or the County ever done that before? I'm sorry, have they ever suspended funding? Yes. Not that I'm aware of. And I think that LAHSA is aware that the game is up because LAHSA has, in fact, not applied to continue in its roles with the COC for fiscal year 2027. Let me ask a more practical or logistical question, which is, why wouldn't LA COC be able to step into the shoes to receive the funding if LAHSA is not permitted to do so? I mean, the timing of the suspension, I understand, created this, I don't know what to call it, so catch-22 is the word I'm going to use, but feel free to utilize a different phrase, but essentially making it impossible for LA COC, because of the timing, to receive the funds. Is that something that could happen that would preserve the status quo, so that the funding doesn't get distributed to any other entity, but also not to LA HSA? I want to be very clear on this point, because this is extremely important. There is no sense in which removal of LAHSA as the collaborative applicant prevents the LA COC from receiving the funding that it would otherwise receive through the fiscal year 2026 competition. In fact, the direct-to-HUD process that HUD has designed reserves 60% of the maximum funding for the LA COC for renewal projects. So, these are projects that LA COC has already chosen to fund in the past, and they will get 60% of funds reserved for them. For the other 40%, those funds will be competed for in the same way as Tier 2 funds for COCs across the country. So, LA project areas will be able to compete for these Tier 2 funds on an equal footing with projects and COCs from all over the country. Let me make sure I understand that, Mr. Saul. From HUD's perspective, LAHSA is out, but LA COC is not the substitute collaborative applicant, and instead there will be this kind of direct-to-HUD application process, right? And is that how the 60% is going to be determined? In other words, there are priorities that were set by LAHSA that presumably they're working on in terms of making sure where that money goes to all of the different service providers in LA. What happens to all of that priority? So, in the direct-to-HUD process, we'll not rely on any priorities set by LAHSA, and that is one of the features. I mean, that's not a problem. I mean, that's expressly what HUD wants, is not to have to rely on LAHSA's allocation and prioritization decisions. But, you know, again, within the realm – now I'm speaking to sort of the 60% of funds that are reserved for renewal projects. With respect to these funds, again, this is – we're looking at the universe of projects that have already been funded by the LA COC in the past. Within that universe, the – But is HUD required to do that by statute, or you're just committing to do that? That's what I'm confused about. That is what is required by statute for other COCs. It is not required by statute for LA because of the suspension of LAHSA. But notwithstanding the fact that HUD is not statutorily required to do so, it voluntarily chose to reserve 60% of funds for renewal projects, which is, again, the same – Well, you think – can I back up? Because the 60% you have to give – you have to give, I mean, that's not – it's the 40% that they have to compete for. But the 60% is going to go to LA COC. Is LA COC – it's actually an entity, though, right? Yes, it is an entity. And I may have been unclear with my language. When I say goes to LA COC, I mean to providers within LA. So back to Judge Desai's question, can LA COC – I don't know if this is what she was asking, but could the money go to LA COC as a collaborative applicant? I'm assuming the answer is no because they don't – they aren't set up to act as a collaborative applicant. But I'd be interested in your answer. Yeah, so I'm not sure if LA COC has ever asked to be a collaborative applicant or whether that would be feasible to do so. I mean, what I can say is that HUD has never ruled out the possibility of LA COC selecting a replacement collaborative applicant, and HUD, you know, obviously would have to approve that. But that is actually something that's expressly spelled out in the NOFO. Right, but that can't happen. I think – Isn't there a timing problem? I'm sorry. Yeah, isn't there a timing problem with that now? And maybe your representation that HUD hasn't ruled it out or HUD is open to it is suggesting that there may be an exception to the deadline that's in the NOFO for LA COC to apply as a collaborative applicant now, even after the deadline's passed? So, let's see. I'm not – I'm not sure, you know, what – I'm not sure if HUD has made a – I can't make any representations currently about the deadline. I know that that's something that HUD is thinking about. I do agree with your honor that I think it is practically very difficult at this point for another collaborative applicant to step in. And, you know, they would have to run a local funding competition and then prepare a consolidated application and submit that in time for the application deadline. So, I think practically it would be very difficult. I would just point out that, you know – It can last even act in 2026. I guess we'll hear from them. But I don't understand what – I mean, they've lost funding. They've lost 250 employees. So, I guess I don't even understand what's happening in 2026. Yeah. Unfortunately, I can't speak to, you know, what efforts they've made so far. But I would just point out that it has been over three months now since loss of suspension. And during that time, obviously, LA COC could have nominated a replacement for LASA and asked HUD to approve that. Well, but Judge Carter says that that process takes several months. Do you agree with that? Or is he overstating that? I'm sorry, that the process for – The process for a new collaborative applicant to step in, he says, takes several months. You know, I can't speak to that. I think there are some letters in the district court record that suggest that the city and county were prepared to possibly act as collaborative applicants. But I don't have, you know – I don't have a clear view on – So, what does this mean as a practical matter? Judge Carter makes a big deal about, you know, housing first versus treatment first. Is that what we're dealing with here? Because that to be what was driving his decision was he did not like HUD coming in to say, we're going to upend how this has been done for, I don't know, you know, according to him, 20 years. Is that really an issue? Or is he creating an issue that doesn't actually exist? Yeah, I think he is creating an issue that doesn't actually exist. Because, again, if we go back to the tier one, tier two distinction, you know, I think, plaintiffs have never explained why, you know, these policy priorities that they claim the government is trying to enforce would be manifested through this direct-to-HUD process. Because, again, for tier one funds, we are only looking at projects that LACOC has already chosen to fund, and we're at least funding 60% of those, or at least 60% of that funding. Can you be specific where that commitment is, either by statute or in writing from HUD? Because I think that's one of the great fears, is that the 60% direct-to-the-applicant, you're going to come in and say, well, we don't want, you know, we don't want these providers who've been working with us for 20 years. And you said something about for other COCs. Well, I don't think it's in the statute. Yeah. So, I have to distinguish here between LACOC and other COCs. For other COCs, it is required by the 2026 Appropriations Act. I understand that. But when you suspended LASA, then it goes into the direct-to-the-provider. So, what is hampering HUD, other than its own statements here in court, to stick to these prior priorities? So, the HUD actually laid out, you know, in extensive detail, how it's going to allocate funding in the direct-to-HUD process. And that's in Appendix 3 to the 2026 NOFO, which is... The direct-to-HUD process has been implemented? What's the status of that? I mean, it is, the direct-to-HUD process defined in extensive detail in the 2026 NOFO that was previously vacated, but now has been restored by the State Pending Appeal granted by the First Circuit. So, again, you know, this is a, this NOFO sort of lays out the rules of the competition. So, it establishes how funding will be allocated through the direct-to-HUD process. Has it been implemented? Has the direct-to-HUD process been implemented? I mean, it's implemented in the sense that it's a part of the NOFO, which is now in effect. So, it defines how the competition will be run. But obviously, the actual implementation of it will not happen until all the applications have come in and are scored and funding is allocated. Do you know whether HUD has been receiving applications through that process? Service providers? Uh, probably not yet. I mean, I don't, I can't say for sure, but obviously, the, the District of Rhode Island had vacated the NOFO, and so there were no applications incoming. But the First Circuit has now stated that they could- The process is just getting started. Yes, exactly. Can you help me understand what's happening with the fiscal year 2025 contract? Are there still conditions that are not fulfilled? Because I know either it was LACLC or lack of sweeping that suggested that there are some administrative matters that need to be taken care of. But given the commitment of funds, there's just really no reason why HUD is refusing to countersign those agreements so that the funds can go to the appropriate service providers. Can you help me with that? Yeah, so, so, um, with respect to, I, what I can say is that with respect to agreements with entities other than LASA, to the extent that there have been delays in executing agreements, there is no difference between those in the LACLC and others. So, so if there have been delays, you know, that those agreements have been treated in the same way as those from other CRCs. Now, with respect to LASA specifically, what I can say is, you know, one reason that HUD is not executing those agreements is because with LASA suspended, you know, executing a new grant agreement with LASA would be in violation of the suspension and department regulation. And so- What does HUD intend to do with that? Because that to me is the classic catch-22 situation, right? HUD's not happy with LASA for good reason, it appears, and now HUD won't work with LASA anymore. Let's assume that statutorily you have a right to do that. But there are these fiscal year 2025 commitments have already been made. What does HUD intend to do about that to basically get the funds to the service providers so that services can be provided on the ground? Just as a practical matter. Yes, absolutely. As a practical matter, first of all, again, with respect to the non-LASA grants, those will be processed in the ordinary course. And if they would otherwise have been appropriate to execute, then HUD will be executing those agreements without regard to LASA suspension. Now, only with respect to the grant agreements that are specifically with LASA, I think this is in the McKinney Declaration adopted 71-2 in the district court. HUD has not yet made a decision on what to do with those. I think it's trying to decide what potential remedial actions it should take on a sort of case-by-case basis. And one possible remedial action that HUD could take is to transfer those grants to another entity that can administer them as opposed to LASA. And I apologize if you've already addressed this. At page 12 of Judge Carter's order, he says, finally, HUD has failed to execute grant agreements for a number of organizations who received award letters earlier this year. Is that what you're talking about? There's this list of service providers that are impacted. I guess that comes from the Reed Declaration. Is that accurate or do you disagree? Unfortunately, I haven't sort of fact-checked those particular organizations, but I do agree that in general, there are agreements that have yet to be executed with LASA for projects that are run by LASA's sub-recipient. And HUD is not executing at the current time in part because, again, with LASA suspended, executing the agreement would enter into a new transaction with a suspended entity. But you're representing that HUD is going through them to the extent that there are sub-providers who are not involved with LASA, that those agreements that we're moving them out to the timelapse, right? I'm sorry. With respect to agreements that do not go through LASA. All of them involve LASA's involvement, and that's why none of them are being signed right now. No, I want to clarify that. With respect to the funding that goes to the LACRC, some of that funding goes directly to project sponsors who, you know, entirely outside of LASA. So LASA coordinates their applications and submits a consolidated application on their behalf. But when those grants are actually made, the funding goes directly to those grant recipients, and LASA is not involved at that stage in the process. There are also some grants that LASA receives directly and are intended for sub-recipients and LASA receives and distributes that funding to those entities. And those are the projects I'm referring to here, where to the extent that there are agreements of that latter type that have not yet been executed, HUD is not currently executing them because, again, it would be a new covered transaction in violation of the suspension regulation. Can I ask you just one more thing about page 12? Because after he goes through this, Judge Carter says this lack of funding comes despite the Consolidated Appropriations Act of 2026, in which Congress expressly required HUD to issue 2025 awards. Is that an accurate reference? Yes. I think it's slightly complicated, but in the Appropriations Act, Congress said that HUD could simply renew awards, which HUD did. And then there's also a statutory deadline for obligating funds for grants that have been awarded, and HUD had also met that deadline. So all of the funds are issued. Is the difference then that Judge Carter is correct that that required HUD to issue 2025 awards, but issuing awards and funding the awards are different? Yes. So there's the issuance of the award, then there's the obligation of the fund, and finally, the execution of the agreement. So for the grant to issue, those first two steps have been completed, but the execution of the agreement has not. And there is usually a delay in between those. So again, as we explained on our previous... But that's my question is, does the 2026 Act obligate you to pay that out? That seems to be what Judge Carter is saying, and I'm not sure that's correct. No, I don't think that's correct. I think the statute requires awards to be made, but it does not require the execution of agreement. Right. So once the agreements are executed, because HUD has the responsibility or the right to require preconditions, so once the awards are... Or the agreements are executed, that's when the actual funds are dispersed, right? Yes. An executed grant agreement is required for a disbursement of funds. Is there a statutory deadline for the execution of the agreement for fiscal year 2025? There is a regulatory deadline that says that after all conditions are satisfied, the agreement must be executed within 45 days. And the only condition, according to HUD, that's not satisfied at this point, that basically prevents the execution of the agreement is loss of suspension, or is there more there? Unfortunately, I can't speak to all the granted issue and whether there are other unsatisfied conditions, but certainly the suspension of LASA is a crucial problem that prevents all of the agreements with LASA that have yet to be executed from being executed. So let me ask you one final question. I know I'm not really strictly adhering to the clock, because actually the facts are moving so fast on the ground, and we really need to understand how this works. And so don't worry about that. And I will definitely give you time to respond after Ms. Axel and Ms. Myers have a chance to respond to the panel's questions as well. But LACLC represented in their briefing that they are now actively interviewing and considering applications for subsequent entities to come into place. And they expect that they'll be able to do that. I don't know if it's aspirational or not, but they hope to do that by the time the PI expires, which is weeks from now. So assuming they come up with a substitute entity, is HUD contemplating just taking that entity in place of LASA and then everything moves forward, or is that an extended process that's going to blow past all of the deadlines for fiscal year 2026, assuming that a substitute entity is found by the time the preliminary injunction expires? I think the district court required a status update on sort of the search for a new collaborative applicant by, I think, October 13th. And I think by that time, I think it, you know, there will be too late for a collaborative applicant to step in and, again, take all the steps to submit an application in time for the deadline. And can LASA then take on that role and step in instead? Would that be satisfactory to HUD? You know, I can't make that representation. I mean, what I can say is that, you know, again, I think HUD has never ruled it out, but I think it would require action at a much quicker pace than, you know, what the district court has. Well, but the October 13th deadline, isn't that for fiscal year 2027? That's not even for fiscal year 2026. I guess, yeah, I think that's exactly right. That's what the district court contemplated with that order was a new collaborative applicant for fiscal year 2027. And that's what LACOC says it has been doing is searching for a new. So, you're not actually giving us a lot of comfort that a new collaborative applicant, in fact, I think you're telling us that a new applicant is not feasible for 2026. I'm not ruling it out. I'm just, I am pointing out that it would be very difficult logistically for that to be complete. And again, I would just point out that LACOC has had over three months to try to identify someone and, you know, the city and county have both said that they could potentially do it, but they have not, LACOC has never nominated a replacement for LASA that HUD could consider. Judge Wynne, I know we're out of time, but can I ask a couple of questions, Phil? No problem. Go ahead. Okay. One is I am confused. I know in the grand scheme of things, this isn't the most important thing, but Judge Carter keeps using the $241 million benchmark and you've been very firm down to the penny almost that it's like $239 million some odd dollars. Can you help me understand the discrepancy there? I, you know, I think we have the right numbers and I think, I think, I think maybe LASA's complaint also has the same numbers that we do. So I'm, I'm confident those are right. I'm just not sure where Judge Carter... You don't know where he came up with the $241 million? No, and I... $2 million given all that's gone on here. And that is, that is the 60%, right? There's, there's no... No, I think that's the whole amount, isn't it? Yeah. I just want to, let me finish my question. So I want to understand, is there a disagreement between whether we need, there needs to be a calculation of 60% of $239 million, or if $239 million constitutes the 60%? No, $239 million is the full, that is the maximum amount of funding available to the LACRC under the program rules. And so that is based on, that's called the Annual Renewal Demand. It's a sort of specific measure of FENDEC funding that was given to the LACRC in past years. The 60% is a subset of that and... So that's like $144 million or something like that? Approximately, yes. Right, and as to the Annual Renewal Demand of the $200, I'll use your number, $39 million, 60% of that is Tier 1, and that's going to be presumptively awarded. That's what you're saying? Yes, that 60%, so the approximately $140 million that Judge Asai mentioned is reserved for renewal projects for projects that have already been funded by the LACRC. All right, thank you very much. Can I ask one more? Sorry to belabor this, but I think that, can you help me understand what Judge Carter meant when he said in his first injunctive relief, he said, first HUD is ordered to distribute the approximately $241 million that was earmarked for the LACRC by Congress in fiscal year 2026. His injunction is only effective until October 27th. Do you read that to require HUD to distribute that money before October 27th? I don't understand what this even means. Yes, to be honest, it's not entirely clear to me either how he intends that to be effective in the expiration date of the injunction. To be honest, I don't have a clear answer for that, but we do that as requiring the distribution of all $239 million according to the priority set. Not necessarily by October 27th. When would that happen? It comes back to the December 1st and then 45 days after. Yes, exactly. The awards would have to be made on December 1st, and then obviously the actual obligation and execution of the agreements would occur on the timeline that occurs after December 1st. Okay. Right, because we're still dealing with the fiscal year 2025 agreements, and then once the 2026 awards or commitments are made by December 1st, then we start that process for fiscal year 2026. Yes, that's exactly. All right. Well, thank you very much. Let's hear from Lhasa and the intervener. Ms. Axel, Ms. Myers, I understand you're splitting time, and obviously the extra time that I gave to the government will be given to you as well, so don't worry about the, I think, seven-minute, eight-minute split that you'd come up with prior to today's hearing. Who is going to start? I'll start on behalf of the plaintiff. I represent Lhasa. May it please the court? I think I would like to start, if the judges would permit, with simply sort of answering the question of what Lhasa has been doing. I think there's a big misunderstanding here. So, Lhasa is, as you know, a joint powers agency. It's a Brown Act agency. Everything it does is fully public and reportable. It plans well in advance. It has regular commission meetings, and so for fiscal year 2025, L.A. County took its action to create its own agency. That was not a complete defunding of Lhasa. That is absolutely not true. L.A. County is still Lhasa's largest funder today. It simply took its own grants and created its own agency to administer. Are you saying that was for 2025 or for 2026? It's implemented in 2026, Your Honor, but it was announced in the summer of 2025 as an agency, again, a Brown Act agency. Are you referring to the representation from your friend on the other side that said this is the event that was sort of the new incident that would justify the immediate suspension? It was this sort of defunding, and that's what you were talking about. It's not a defunding, and what you're clarifying here is that they created a competing organization and took some of those grants away from Lhasa, but it wasn't a defunding. Correct. In fact, Lhasa's budget for 2025-2026 was announced last summer. 2025 was $830 million. This year, fiscal year 2026-2027, beginning in July, is $400 million. The difference is what L.A. County took to start its own agency, but Lhasa has still continued to exist and has five major functions. Hold on. I'm trying to This still took away $400 million from what? That Lhasa had a full year to prepare for and did prepare for, so nothing happened in June. It was all prepared for and internalized by them, so that includes we even continued to do our HMIS functions, our CES functions, our PIT count functions. The PIT count, which HUD relies on, and in fact, during the period of the alleged suspension, HUD has accepted our numbers on the PIT count. We finished it. We conducted it in June. We finished it in July, published the numbers. We've run the HMIS system. That has 25,000 support tickets a year and 400 users across the county who rely on that data. Literally, a homeless person comes into a service provider and accesses through the service provider, uses lots of systems. Let me ask you this. I don't think you would disagree that HUD has the authority to, if it finds that one of its grant awardees is engaged in misconduct or if there's fraud and abuse and some of these allegations that they have levied against Lhasa, what is its remedy? What can it do? What would you propose that HUD do to be able to feel comfortable funding, to the tune of many hundreds of millions of dollars, an organization that it has an OIG investigation that says there are concerns? It doesn't have that, by the way, just to say. It doesn't. It opened an OIG investigation two weeks before the suspension. We believe the whole thing is pretextual, by the way. What it had to show in order to justify an immediate suspension is adequate evidence. The court just didn't reach that. If you were the merits panel, you would see we have complete arguments on why there is that. Wait, wait, wait. Counsel, let's back up. I don't think it's fair to say the court didn't reach that. The court said it has exhaustively addressed that issue and there is more than ample evidence to support corruption within Lhasa. I'm fine to talk about the second part of it, but I don't think it's fair to say that the district court didn't find that HUD was appropriate on the first issue. I would agree that Judge Carter is no fan, Your Honor, but he specifically said the court does not take up the issue of sufficiency. Only because he'd already addressed it. No, I think he didn't address it. He just simply went to immediate harm and he decided on two prongs that they had to satisfy that they could not satisfy the immediate harm prong. The entire opinion then turns on that. Let me ask you about fiscal year 2025. I just want to make sure I understand the facts so that there's a practical solution if Judge Carter implements that. I think that's good for the unhoused population in Los Angeles and should work out for LACOC as well. For the fiscal year 2025 contracts that haven't been executed, is Lhasa involved in all of them? Because Lhasa was the collaborative applicant. Sorry, this is the fifth rule, Your Honor. Lhasa submits these as a direct applicant. I also want to touch on this if I can, even with respect to whether or not these organizations would be renewal. They wouldn't because Lhasa applies on their behalf. There are 54 organizations. These are service providers. We submitted declarations. This is unrefuted and HUD doesn't even mention it in any of its briefs. These are domestic violence service providers. These are transitional youth service providers. These are disability service providers. Lhasa is the applicant. These are called sub-grantees. Lhasa has been doing this for decades. They prepare the application on their behalf. The declarations we provided say these agencies don't even have the resources to do their own application. Lhasa applies on their behalf, then gets the grant. Then when reimbursement requests come in, Lhasa submits those reimbursement requests on their behalf and processes the funds to them. All of these grant agreements are with Lhasa. I also want to defang this conditions idea because the Q1 and Q2 agreements were already issued by HUD. We dropped a footnote and said you should not consider the McKinney Declaration. It was submitted on the motion for stay and not just as a formality but because we didn't have a chance on a 24-hour ex parte basis to submit opposing evidence here. There is a process by which HUD imposes conditions. Q1 and Q2, those would have been done already. Those grant agreements have already been issued to Lhasa. Lhasa signed them and sent them back. Then the suspension came in and HUD refused to countersign. As to Q3 and Q4 agreements, we are now also 90 days past when those have been issued. If they were going to issue conditions, they would have done so already. What you're saying is that as a practical matter, in prior years, Q1 and Q2 would have been funded, meaning actual disbursement of funds by now. It's a two-step process, just so we're clear. I think this also maybe needs to be clarified. When the grant agreements are executed, the funds hit something called the ELOC system, but they're only drawn down as the reimbursement requests are processed. This, again, goes to the lack of irreparable harm here. HUD needs to sign these and make these payments processed. Lhasa can't continue to do these functions. Can you address what is the significance of the PI terminating on its own terms on October 27? Even if we were to deny the stay request by the government, what does this mean for what's going to happen between now and October 27 and what happens after October 27? Are you all seeking a permanent injunction at that point? The court did a merit hearing in February, so I presume, but again, I somewhat have to presume that the court will revisit the terms of the preliminary injunction at the October 27 hearing. What I believe Judge Carter intended to do is he found the suspension arbitrary and capricious because there was no immediate need for it. What he intended to do then was implement the status quo for this year, 2026, which in grant terms is fiscal year 2025, that the grants would continue to be paid as they were and that he would provide a soft landing maybe for the future. I think that's exactly what he's trying to do. That's what he's saying with the COC application and the $241 million. That's what he's saying with the grant agreements is 2026, which is FY 2025 funding should continue. FY 26 funding, which is loss of finishing the NOFO, which by the way, it began this process in April, and I will refer you to the Reed declarations. They're very detailed about what Jessica Reed's job is, which is to prepare all the collaborative application stuff and started back in April through all these very bureaucratic Brown Act compliance sets. Judge Carter said that should that process, which provided appeals for service providers who were denied, they had opportunities to come to the commission, that should continue. LASA should finish that application and go forward. Then the COC should have time to make a transition plan for the future into 2027. That's what he's trying to do. I believe at the October 27 hearing, that's what will continue to happen. He will hear from the COC on its future plans, but he will make sure that these ways in which LASA has done its functions, functions that are funded by the city, by the county, in a coordinated fashion to address the region's needs. The government's position, Ms. Axel, is that, well, we don't want to work with LASA anymore. There's good reason not to do it. We've implemented, which we're committed to do under the statute, this direct to HUD application process. That will be an adequate substitute because the 60% of the annual renewals of the ARD, HUD is going to comply with that. Whether it's statutorily driven or regulatory driven, they are going to comply with the tier one funding based on prior years priorities, I guess, set by LASA. How do you respond to that? Help me understand why that process is inadequate. Yeah. In prior years, this ratio was more like 90-10 instead of 60-40. In a region that's as huge as LA County is, that's a lot of money and a lot of organizations that will not be refunded, will not be funded again. The selection of that 60% is critical to allowing the region to actually plan ahead for this shift in HUD priorities. I know Ms. Myers is really prepared to discuss this as well on behalf of the COC. We would both to the declaration from actually the head of the LA County new agency. You're saying it's inadequate. You're saying that even the commitment by HUD to fund the 60% is still not good enough because they aren't going to honor the LASA priorities for where that funding goes for the tier one dollars? Two things. I think there is some misinformation here and it's still not been underlined. 54 service providers are not considered renewal applicants and they can't apply on their own. They're just out of business through this direct-to-HUD application process. Hold on. That's a third-party harm. Wait a second. Wait a second. You're saying that as to the statute, and this is why I was pressing the government, but the government has represented that they are going to do that. Do you disagree that the government's going to do that? Correct. They can't the way they set the system up. I do feel like the litigators here don't really know how this works. These people really don't even have a number to apply as a renewal applicant. LASA was the renewal applicant. When there is a new collaborative applicant, that person can step into LASA's shoes and do that. No, but they can do it direct. They can do it direct. They can do it direct. Why can't they do it direct? It's not how the system works. It's not how the bureaucracy is set up within HUD. You literally have... Let me give you another example, Your Honor, that you can verify yourself on the web. Hold on. Hold on. Let's just take a break because you're going to have time, but you're talking really fast, and I'm not sure you're answering the question. All that I understand this to be is the government... No, they may be not telling the truth. I don't know, but they are saying, look, we are going to go to those entities that previously were funded, and we are going to prioritize them, and they're going to pay them directly. I don't understand why you say that can't happen. They have not set up, Your Honor, actually the bureaucracy that would allow people to do that, and it's very difficult to do. You literally have a number. You have an access to the system. There are some organizations like the LA City organization that apply alone. They have their own numbers. They have their system. They would be considered renewal. The people under LASA would not be considered renewal, nor do they even have... Help me understand why it matters that they're considered renewal. Because in order to provide that region stability, which HUD is saying it's going to provide by doing its own picking, you have to get to that 60% renewal amount. I was going to point you to the Mahan Declaration, which shows how important this is. Which declaration? Sarah Mahan. I think COC did make that part of their appendix. This is a super complicated system. Typically, HUD has funded mostly permanent supportive housing. Mostly the city and county have picked up transitional interim, getting people immediately off the streets. HUD intends to shift priorities this year, both in terms of the number of renewal applications and in the type of project to be renewed. If the region only finds out in December or January what that is, that means service providers immediately dropped with no time for the city or the county to rejiggle their web of support to make all this work together. That's why it doesn't work. Congress intended for this, for the region to have months of notice through the application so that they can make their own changes. Hold on. Hold on. You just made a pretty broad statement. You said Congress intended to have months. What leads you to believe that? That's the HEARTH Act itself and the way it structured the COC program, Your Honor. I believe that. That's how they structured the program, but they've also said that when... I know we have a question about whether immediate action is required or not, but there is a provision by which they can go direct to funding. So, I don't think it's fair to say that Congress didn't contemplate this problem. Well, I think... Look, again, we think that Judge Carter was absolutely correct and deserves discretion on the fact that if lawsuit is not properly suspended, if there's an APA violation, then he can throw out the remedy as well. But the NOFO itself also had provided an opportunity for the COC to substitute a collaborative applicant, therefore, to actually meet what was Congress's intention that the region plan. Can I ask you about that? Because you said... I understand you believe Judge Carter got that right, but can you cite me to any authority that says that because an agency has not taken action in the past, it cannot, therefore, take action in the present for past violations? I don't think anybody's saying that, Your Honor. I don't need authority for that. Well, no, that actually is exactly what Judge Carter is saying. Judge Carter is saying that because you didn't take action in the past, you are preempted from using those past violations for the current suspension. Judge Carter is saying that given the past history, which all of this only has to do with administration, the prior history of grand administration issues, they could not point to alleged new issues and say somehow that requires immediate action. Why is that required? Can you point me to any case law that says that a new, immediate harm that didn't preexist a year ago, but it's not an immediate harm? No. Okay, but can you show me any case law? Because I didn't read Judge Carter to cite any case law. Can you show me any case law where an agency is precluded from relying upon past violations? I wouldn't say that there's case law that they're precluded. Nobody's arguing that. Judge Carter said that, Ms. Axel. Again, Your Honor, respectfully, I think what Judge Carter said is I don't mind- But you're saying you don't have any case law that says that they're precluded from acting on prior violations or prior- I think there is a case, organized kill versus the case of USDA 795S3-956 that says an agency can't discard prior factual findings without a reasoned explanation. I think that goes to the fact that HUD, in addition to having this information in the past, also made, and I want to underscore this, in May, it made new grants to LASA. It issued those award letters. Under the NOFO, the 2024-2025 NOFO, which was in effect, HUD had to consider all the very same factors, LASA's ability to manage its programs, LASA's fixed fiscal responsibility, all the same factors are spelled out in the NOFO, HUD considered them in May and disregarded those findings in June after just awarding money. So, I think we do have that authority that says they can't just disregard their recent factual findings and then claim this sort of immediacy about them. All right. Thank you, Ms. Axel. We've taken you, again, well over time. So, unless your colleagues have any additional questions, let's move to Ms. Myers. Thank you, Your Honors. And may it please the Court, Shala Myers on behalf of the Los Angeles Continuum of Care. HUD's immediate suspension of LASA, which has effectively led to the disbanding of the COC for purposes of the collaborative application process, has caused unprecedented and significant disruption to the region, as evidenced by the oral arguments. I still don't quite understand why LACOC can't designate itself as the collaborative applicant. In the shoes of LASA, that seems to be setting aside whether HUD acted suspiciously and arbitrarily in suspending LASA. There's a long history of mismanagement and problems that Judge is so short that can LACOC just step in instead of finding another entity saying, okay, well, we know what the collaborative applications look like. We know what the priorities are. We'll serve as the collaborative applicant for fiscal year 2026 and then make whatever decisions for 2027 at a later point in time. Can that happen? No, Your Honor. Simply because the Continuum of Care is a group of stakeholders who have come together to, importantly, for purposes of this, set the priorities for the region and engage in the collaborative coordinating process that Congress requires. It does not have the administrative capabilities to serve as a collaborative applicant itself. Your Honor, and importantly, that does not mean that the LACOC was not in a position throughout this entire time to designate a new collaborative applicant. And I want to address... In terms of designating a new collaborative applicant, LACOC indicates that it's actively looking for one and expects to have that done by the status conference at the end of October. Is that right? You'll have that done before October 27th? Yes, Your Honor. And importantly, Judge Carter's preliminary injunction requires the COC to seek a collaborative applicant for FY 2027. But the COC has, since it received the remedial measures, order from HUD, been undergoing the process of designating a new collaborative applicant and, in fact, made that representation to HUD in its response to the remedial measures in July of 2026 in the 30-day window that it was given to respond and specifically requested the opportunity to designate a new collaborative applicant. HUD responded by indicating explicitly that if remained suspended, it would move forward with the direct-to-HUD application process. So, the representation by the government... It didn't give LACOC an opportunity to bring in another collaborative applicant for fiscal year 2026? Absolutely not. The COC has been requesting that as an alternative since the COC... Explain to me why HUD's preferred approach of direct-to-HUD applications would be inadequate. The direct-to-HUD application process, with all due respect to the government, is not simply a matter of one-for-one replacement. The collaborative application process allows a region to engage in coordination of the dedication of resources. They have been undergoing that process. The LACOC sets the priorities for the region, and LAHSA puts together the collaborative application. As Ms. Axel pointed out, that has been ongoing since April to determine what the priorities are. HUD is only funding 60% of the renewal projects, which means the COC is in a position of needing to replace 40% of its funding, and they have been working with funders throughout the region to prioritize which renewal projects will be put forward for funding and to replace and fill in those gaps. That has been part of the collaborative application process this year, which is unprecedented, has required a considerable amount of collaboration, and that's exactly what Congress intended. Council, you keep saying as if this is unprecedented, but you were never guaranteed that 40%. That's what's creating the hardship here. In fact, you might still get the 40%, right? Your Honor, we are talking solely about the 60%. If the collaborative application is allowed to be submitted on behalf of the COC, projects will know tomorrow, presumptively, that they are funded in FY 2026. They will know tomorrow. The direct-to-HUD application process means those projects, 140 of them, have to apply directly to HUD, starting who knows when. But Congress contemplated that. Everybody's freaking out about this. I have no doubt that I do not understand everything on the ground. Let's just take that as a given right now. But Congress provided for this. We got the whole problem of whether the APA was violated. I understand that. But this idea that, oh, this is unworkable, Congress specifically said this is how it could work. It might have been wrong. Maybe Congress had no idea, the same as I have no idea. But that's what Congress did. How HUD is using the remedial measure process here is unprecedented and likely not- That may be. That may be, meaning it's never been used before. But it's also likely not what Congress intended because the COC process allows, and the NOFO allows, a collaborative application or a collaborative applicant to be replaced. So, if, in the event that a collaborative applicant cannot serve- Hold on, counsel, because this is kind of important. I mean, you say Congress contemplated. Congress didn't put in the immediacy requirement. HUD put in the immediacy requirement. So, Congress said, look, if a collaborative provider, sorry, I've got the words wrong, if a collaborative provider cannot function, I don't think anybody's doubting, except for LASA, they still think they can do it. But nobody else in the entire world thinks that LASA can do it. So, they've met the statutory requirement and the statute says then HUD can go to direct to the grantees. Importantly, your honor, the statute explicitly provides a 30-day response period and perceives this as remedial measure. Hold on. I'm very interested in this. Where's this 30-day response period and what are you talking about? It is in the same provision that HUD is citing with regards to the remedial measures. Where Congress allows the HUD to implement remedial measures, it provides a 30-day response period for the COC to respond to the proposed remedial measure. And in that time, the COC responded and requested the ability to replace the collaborative applicant. What HUD is effectively saying here, your honor, is- Well, hold on. I think this goes back to Judge Wynn. I think everybody's asked this question. Can you replace the collaborative applicant in 2026? Yes, if the COC is given sufficient time to do so. And your honor, this is where- That's what your complaint is, is that it wasn't done in January. It was done in May. And so, you were put behind the eight ball. Even worse, your honor, it wasn't until HUD's reply brief that HUD has indicated its willingness to allow the COC to replace the collaborative applicant. The record on this point is clear. The COC went to HUD during that 30-day remedial measure period and asked for the opportunity to replace the collaborative applicant. HUD was explicit that it would not allow the COC to replace the collaborative applicant. It was moving forward with the- Because this is a new issue, and I think it's actually a pretty important issue. And I got to be honest, I don't know where to go from here. Are you saying, Ms. Myers, that the representation by government counsel today, that they're not ruling out- I think he said multiple times the phrase that he continues to use is, we're not ruling out the possibility that LACOC can stand in the shoes of LAHSA for purpose of the collaborative applicant. But I think it will be very difficult, or for our practical reasons, it may not be possible, but we're not ruling it out. Are you saying that that is a change in position that initially when LACOC sought to do that, the government, HUD expressly denied that request? Well, your honor, that is exactly our position. And it's not that HUD denied it, it's that HUD did not respond to it, and rather make publicly that it was moving forward with the direct to HUD application process in any circumstance in which the government found that the COC did not have a relevant collaborative applicant. And your honor, I think this is where HUD has stepped far outside the bounds of what Congress- Is that your best argument for arbitrariness and capriciousness, is that the provision allows LACOC to bring in a substitute collaborative applicant, but the government refused that. And because of that, now the timing is too tight for LACOC to bring in the collaborative applicant for fiscal year 2026. Is that your argument? Our best argument with regards to arbitrary and capricious is that HUD failed to take into account the implications of its suspension on the region. And your honor, it's only- Can I ask you about that? Can I ask you about that? Because I understand that's a practical concern. Judge Carter hammered that down. Where is that in the statute that HUD has to do that? That HUD has to consider the relevant factors? It's in the administrative procedures after all, and this is a straightforward application- Whoa, whoa, whoa, whoa. That's not true at all. Where is it in the statute? What it says, the only requirement that I read in the statute is that HUD has to make a determination that the collaborative applicant is unable to comply with its duties. You're now saying there's a separate part. It doesn't come from the APA, Ms. Myers. Where in the statute does it come that HUD also has to consider the... By the way, I think they may have considered it, but I want to know where in the statute it says that that something they have to do before they go direct to the applicant. It's in a 30-day provision that allows the COC to respond, and also the fact that these are remedial measures, and that's important. The COC could have cured losses, inability to serve as a collaborative applicant. And that's the important piece of this. It cannot be the case that intended that if a collaborative applicant cannot serve, that the COC is immediately out of compliance. And we know that- Ms. Myers, I'm totally with you. Ms. Myers, I'm totally with you on your policy arguments. I'm totally with you. I want to know. You say Congress couldn't have conceived that. That's great. So show me where Congress said that. I'm going to go look at that 30-day provision, but I don't think it says what you say it says. Your Honor, HUD itself contemplates that in the event that a collaborative applicant is not able to serve, that the COC can replace the collaborative applicant. That is in the NOFO. That is on page 58 of the NOFO. And it was also in the notice provision. Congress gives HUD the authority to put forward a NOFO related to it and set forward the requirements. The requirements provide that HUD will allow the replacement of a collaborative applicant if, as here, the collaborative applicant is not able to serve. Mr. Shaw said that LACOC had three months to designate a collaborative applicant. And it sounds like that might have been in time for fiscal year 2026. Are you saying that based on the government's prior position, that it was going to proceed to provider applying directly to HUD, that because of that, you didn't designate a collaborative applicant in time? Is that some sort of like a reliance interest argument? No, Your Honor. HUD was explicit that it was moving forward with remedial measures and a direct to HUD application process. No, I understand that. But Mr. Shaw said earlier in today's argument that it would have been willing to take a collaborative applicant. And he mentioned specifically the three-month time period. Right? And, Your Honor, this is a problem with HUD shifting positions in this litigation. That's what I'm asking you to clarify. Is it because LACOC relied on that prior representation that HUD was going to go directly to the application process that's provided in the time? Because the moment I agree, it's too late now. Right? Given the timing, it's too tight. Absolutely, Your Honor. And it is not so much that the COC did not scramble throughout this entire time period. They've been working diligently to replace the collaborative applicant. But HUD has been explicit that the LACOC could not replace the collaborative applicant. They have explicitly stated- You have a substitute collaborative applicant that can step in now because it seems like HUD is willing to consider that, setting aside how tight the timing may be. Yes, Your Honor. The COC is in the process, irrespective of the preliminary injunction, the COC is in the process of going through- Again, this is a Brown Act-obligated body. It has a charter. It is going through the process of designating a new FY 2026 collaborative applicant who can stand in the shoes of LASA to submit the application if there's sufficient time. The reliance issue comes in, Your Honor, that HUD has made this representation and changed its position now at a time when it says it's too late for the new entity to submit the application. Where can we find this stuff? I don't want to short shift your argument, but I got to be honest, this is the first time I'm hearing it. So, where can I go to read about this? Specifically, HUD's position relative to the collaborative application? Yeah. HUD made that representation on- Just tell me where I can go. Just tell me where in the record I can go. Sure. It is in its court filing to the district's court that was submitted on July 21st when it informed the district court that it was moving forward with remedial measures if LASA remains suspended. Also, we cited to the COC the continuum of care website, which is HUD's representation and its NOFO. We also provided the NOFO in the record. Your Honor, we're happy to brief this issue. Again, literally in the reply brief, it's the first time that HUD has represented anywhere- The reply on the stay. The reply to the collaborative application. The reply on the stay is the first time? Exactly, Your Honor. The reply to this court on the stay. And Your Honor, that's exactly the problem here. And I would point the court to- Ms. Myers, could you finish that sentence? In the reply brief, it was the first time that HUD has made any representation that the collaborative applicant could be replaced by LACOC. That is the first time ever in the course of this litigation that HUD has made that representation. Ms. Myers, I just want to ask a logistical question, which is, if way back when, notwithstanding HUD's explicit statements that it would not accept a substitute collaborative applicant, LACOC had made a decision to proceed anyway with applying itself or putting forward a substitute applicant, what would be the steps to do that? What would you have had to do? Is it as simple as sending a letter stating, here is the substitute collaborative applicant? Is there actually a process that you have to go into some sort of computer system and HUD has to allow permissions and an application number to do? I'm just trying to understand whether- I mean, it's one thing to not proceed because you're being told it's futile. We're not going to accept it. It doesn't matter. And it's another thing if it is practically impossible to actually take the steps to do that. The LACOC would have and is prepared to submit a letter to HUD and to the field office. And then HUD has to take administrative steps to actually change the permissions to allow the new collaborative applicant to proceed on behalf of the COC. So it's all back-end work that HUD has to do in order to actually apply for- allow the COC to switch the collaborative applicant and the new collaborative applicant to apply. There are also significant administrative burdens related to switching. The collaborative application is an arduous process. It is required and the planning for this started in April in the COC region. And so the COC was prepared to adopt a new collaborative applicant and remains prepared to adopt a new collaborative applicant had that been an option available. But absent the availability of it with the stay in place, loss of proceeding with a collaborative application made significant sense. Had HUD met with the COC, responded to the COC's remedial measures response and said, yes, you can proceed. We were- you're changing our position. You can, in fact, proceed with a new collaborative applicant. Then the COC would have moved forward with its proposed collaborative applicant. So as you stand here today, your- your- the request that- for relief that you have asked from Judge Carter and then from this panel with respect to the injunction is that your preference is still to have LASA continue in that role because of the, you know, the difficulties in onboarding an entirely new collaborative applicant. But if that is a sort of your second choice would be to implement a substitute collaborative applicant. Those are the- is that a correct summary of your position? Exactly, Your Honor. What is at stake right now is eight days. There are eight days before HUD has set the deadline to apply for 200- To direct to HUD. For the direct to HUD. No, for the 4.1 billion dollars in funding. HUD has set a deadline of September 30th. And, Your Honor, just as a minor point, but Judge Nelson, I do want to appreciate your point about the 239 versus 241. The 241 number came from- that was HUD's original allocation. They did a recalculation in the interim period that got to the 239. They released an amendment to the prior calculation. Do you agree- do you agree that it's 239? I'd like to, like, find some commonality here on any issue. Do you agree that it's 239 and not 241? Yes, Your Honor. This is- this is the shifting nature of what is happening at HUD, is that this is- it was a recalculation that HUD issued. Okay. Thank you for explaining that. All right. Thank you very much. Unless my colleagues have any additional questions for Ms. Myers, we can go back to Mr. Shaw. Can I make one final point, Your Honor? And I think this is an important piece. Go ahead. But, importantly, last week, the United States Supreme Court in the United States Postal Service versus California dealt with a very similar issue and declined to issue a stay of a preliminary injunction. And Justice Kavanaugh's position and concurrence in that case is extremely helpful, I think, for purposes of this. Justice Kavanaugh said, while the- while the regulations themselves may be legal, this is effectively a timing issue, is that the U.S. Postal Service's actions were arbitrary and capricious because the state and local governments did not have time to implement the regulations without significant disruption. And, Your Honor, that's exactly the point here. We are not taking issue with the potential that loss that could be debarred down the line, but this is simply here on a stay motion of a very limited injunction that will stop the chaos that is occurring in Los Angeles as a result of the suspension. So, I appreciate the extra moment to make that point. Thank you. Mr. Shaw, can you- Oh, thank you. You addressed the argument raised by Ms. Myers in terms of HUD's almost very immediate decision that LACOC would not be given an opportunity to bring in another collaborative applicant. No, I mean, that's just simply wrong. I mean, HUD has never made a decision that LACOC cannot replace its collaborative applicant. And I, as far as I'm aware- I think what she's saying is that HUD gave notice of its intention to, or immediate suspension of LASA. There was a 30-day period during which LACOC could have responded, but that HUD took the position, I don't know if it's in court or directly to LACOC, but at a minimum, she said in a filing on July 21, the government took the position that if LASA remains suspended, it would proceed to the alternative of requiring providers to submit direct applications. And so, I guess if you piece it all together, there wasn't an opportunity within that 30 days for LACOC to come in and say, wait a minute, give us, I don't know, 30 days, 45 days, 60 days to come up with a substitute collaborative applicant. So, let me break that down. So, the June 11th, I'm sorry, the June 18th letter did give LACOC 30 days to respond regarding the remedial measure, and I believe LACOC, in fact, did so. I think what they are relying on is sort of the distortion of what the government has said. I mean, the government- Did HUD respond to LACOC's July 17 letter? Yes, they did file a response to the government. Now, I don't think the government has- No, no, no, yeah. Yeah, that's what I'm asking. Did the government respond to LACOC's- No, and as far as I'm aware, there's not a document in which the government has directly responded to that letter. All of the statements that I think Ms. Myers is referring to are statements which are consistent with the June 18th letter is that this is HUD's current plan. We are going to proceed with direct to HUD. That does not mean that LACOC cannot or is precluded from nominating a replacement collaborative applicant. I mean, that was the plan outlined in the June 18th letter, and HUD was planning to proceed with that, but they never, ever excluded the possibility of a replacement collaborative applicant. That just simply is not correct, and there is no document that I'm aware of anywhere in the record or on the web or anywhere that makes the representation that LACOC cannot proceed with a replacement. As a practical matter, let's say that we denied the state pending appeal, perhaps with regard to money. We'll have to sort that out because even LACOC adopts a narrowing construction of what Judge Carter may have meant by his order to immediately disperse the funds, and HUD implements the direct application process, which sounds like it's barely getting started right now. And then at the status conference, the LACOC comes into court before Judge Carter and says, now we have a substitute applicant. Can HUD pivot then from the direct application process to accepting the substitute applicant? Or are you saying that would work out? I mean, I think that the main difficulty, the logistical difficulty here is primarily on the collaborative applicant's end as opposed to HUD's end because all the work has to be done by the Just to reiterate what you just said, at page 17 of Judge Carter's order, he says the consolidated application typically takes several months to prepare. Is he right or is he wrong about that? I mean, unfortunately, I'm not familiar enough with the process to be able to speak to general timelines, but, you know, it is an involved process and normally requires running a local funding competition and then preparing a consolidated application. So, yes, I do think that is the case. Judge Carter's concern, right, that there's no way they can find a substitute collaborative applicant. So, now we're really, as a practical matter, from Judge Carter's perspective, and it sounds like he's right about that, either go with the direct application process or allow LACOC to submit for fiscal year 2026 its application. You know, as a practical matter, that may be, those may be the only two practical choices. But, again, I would just point out that LACOC did have a long period of time in which HUD has never said that it was not allowed to nominate a new collaborative applicant. In fact, did you invite, did HUD invite LACOC to submit a substitute collaborative applicant? I mean, I'm just really troubled by this, what seems like a gotcha argument, which is, you know, we're not, we're going to set forth our priorities and say we're doing it this way, we're suspending LASA, and we're moving to the direct application process. Then you get a letter from LACOC that says, we don't agree with that, we object to that, there's all these logistical and practical problems, we'd like to have the opportunity to submit a substitute collaborative applicant or step in to that position ourselves. There's no response whatsoever from HUD. I think you've acknowledged that there was no response. And then, but you're sitting before us today arguing, well, they should have proceeded to do that anyway, but if they had, we, you know, it's unlikely, we're not ruling it out, but logistically and practically, it's unlikely that it would have been timely and that it's possible on the given timeframe. So, it just, I'm curious to know if HUD is in search for a solution to the problem of its own making, did it reach out to LACOC and try to come up with the solution or invite them to submit an application for a substitute collaborative applicant? Not as far as I'm aware, but I would just point out, first of all, that again, this is not, you know, HUD is not coming up with some process out of the blue to replace the collaborative applicant. I mean, this is a process that Congress has specifically authorized for this very situation where LASA has been suspended, cannot perform its duty in applying for funding by virtue of the suspension regulations. And this is specifically what Congress thought would happen with that, you know, applicants would go directly to HUD and ask for funding. So again, the idea that this is some crazy solution that HUD came up with and is using it to sort of, you know, or some form of pretext is simply incorrect. I agree with you, Mr. Shaw, but can you answer two questions? Number one, has this ever been used before? Has this direct to funding ever been used before? And secondly, can you address the arguments that are made that HUD is just judge Carter mentioned some of this and we've heard it today that, you know, HUD can't do this. Yes, I'm happy to. Not statutorily, but pragmatically just can't do it. Yes. So I'm very happy to speak to that. As for the first question, I'm not aware of that. I personally am not aware of any instances in which it's been used before. But certainly, there's actually substantial evidence in the record about the practicality of the direct process. And actually, I would point the court to the dentry at docket 64 in the district court docket, which is a letter from the city of Los Angeles. And at page four, the city actually says, and I quote, the city views the direct applicant approach outlined in the prior paragraph as a potential temporary solution to ensure continuity of care in the city, should the court not enjoin HUD suspension of lawsuits. So certainly in the city's view, this is a viable solution. We also explain both in our brief and in the declarations below why this is actually feasible. You know, first of all, from HUD's end, I mean, HUD is in the business and has been in the business for decades of, you know, accepting applications, scoring them based on rating criteria, and then awarding funding accordingly. I mean, this is HUD's bread and butter. So obviously, HUD- And it's also said that the process is complicated. And obviously, you're talking about a lot of providers here. Is there a process that's set up where providers can directly apply without the need to get a number from HUD or anything like that? And the mechanics of it has already been set up? Or is it still in the process of that? I'm happy to speak to that. I mean, I think the HUD has tried to make this process as easy for applicants as possible. And first of all, I would just point out, you know, these applicants already have to apply through a local funding competition. So they already, just in the normal course, even if LASA were still a collaborative applicant, they would have to prepare an application and go through that process. So really what this is doing is just taking out the middleman and having these applicants submit their applications directly to HUD as opposed to going to LASA. Furthermore, I mean- Again, you don't have any indication for the panel as to whether applicants are flooding in. I think it's just open. I don't think applications have been received yet. So I don't think it's actually occurred yet. But I would also point out that HUD, by technical assistance, has been preparing step-by-step guidance for applicants and stands ready to provide technical assistance to any applicants, which, you know, it already does just through the CRC competition more generally, but also specifically here is able to provide applicants technical support to ensure that they're able to get their applications in. So again- If LASA is allowed to remain the collaborative applicant, what's the deadline? I'm sorry, the deadline for a for a application, a consolidated application? Right. I think, unfortunately, I don't have the exact date, but I did want to make clear on in this that certainly to the extent that a direct to HUD process is used, HUD is considering giving an extension of the application deadline to applicants in the LA area because obviously, you know, there's been a lot of uncertainty about what's happening here. So that's something that HUD is currently considering. You're saying if you go down the direct to applicant route? Yes. So that's something that- Without an extension, what's the deadline for the direct to HUD application process? Currently, you know, without an extension, it would be the same as the deadline for everyone else. And I'm actually looking at- We still don't know what that is. Is that in a week or- The deadline is September 30th. September 30th. Which is the current deadline. Regardless of whether it's a collaborative applicant or not. Right. But again- Would you give an extension? I mean, what I'm trying to figure out is what do we need to decide and when? And I mean, you came in and said, hey, you wanted relief by September 14th. We gave an administrative stay. Now we're grappling with the merits. Do we have to act by September 30th? I mean, I think- Now we're dealing with just the stay motion pending appeal. Now- Right. If we get to that, we can address mootness when we get to the hearing on the appeal at the preliminary injunction. But things are moving very, very quickly. So that's why- That's exactly right. What the deadline is. Because at this point, it sounds like if we grant the stay pending appeal, in effect, it's going to go to the direct to HUD application process. If we deny the motion pending appeal, then LAHSA is going to have to be prepared to step in and meet that September 30th deadline. Yeah, I think as a practical matter, that's correct. As a practical matter, that's what the panel has to grapple with at this point, right? I think that's correct. I mean, obviously, time is of the essence for everyone in this process. I want to be clear about where- because this is very- It's the collaborative applicant now that is the time is of the essence. The money actually is not, because the money is not going to go out until February. Well, end of January or February. And I thought this was being driven by the money, but it's actually being driven by the collaborative applicant process and the deadline on the 30th. And I think all of those, unfortunately, are relevant deadlines. I mean, obviously, there needs to be enough coordination in the process so that whoever is supposed to apply can get their application in. I mean, again, as I was saying, I think HUD is considering an extension of the deadline for- Well, but I'm confused. LAHSA presumably has already been preparing its application because that was what the court- entered its injunction. So, anyway. All right. Yeah. My concern, Mr. Shaw, frankly, is that just as a practical matter, with September 30 being the deadline and with the direct-to-HUD application process just getting started, that the providers in LA would have the bulk of the country's providers wouldn't be able to pivot in time to submit an application, not to mention that the priority set up in prior years and outcome going to be all messed up. But I understand. I understand your argument. So, unless my colleagues have any additional questions, I really appreciate all counsel for appearing and providing very helpful clarification. LAHSA, could I speak to the deadline? Well, no. Unless it's not September 30. Is it September 30 as it currently stands? It is, but there is also HUD processes that kick in even a week before. So, you know, LAHSA has to submit the list of recommended providers to the LACOC- No, I appreciate that. And that's my point, right? Like, LAHSA would be the only one that's ready to go, it sounds like. All right. Does Melvin justify any additional questions before we conclude this hearing? No, thank you. Thank you very much again to all counsel. The hearing concludes and we'll issue our decision. We'll try to be as speedy as we can, given the timing of it. But you really put us in a position of trying to grapple with a very complicated factual situation in short order. We appreciate your time for matters with it. Thank you. Thank you. This court for this session stands adjourned."
}