A US federal appeals court has largely refused to let the Trump administration implement sweeping changes to a decades-old grant programme used to combat housing discrimination while a legal challenge continues.
The Boston-based 1st US Circuit Court of Appeals rejected most of the administration’s request to suspend a lower court order preventing the Department of Housing and Urban Development from overhauling the Fair Housing Initiatives Program while its appeal proceeds.
The programme, created by Congress in 1987, provides grants to organisations that investigate housing discrimination and assist people seeking to enforce their rights under the Fair Housing Act.
HUD moved to restructure the programme in July, prompting a lawsuit from the National Fair Housing Alliance and the Massachusetts Fair Housing Center.
The groups challenged plans that would redirect funding away from more than 100 nonprofit organisations that had historically received grants.
Under the previous system, HUD typically awarded more than 100 grants ranging from $75,000 to $425,000.
The administration instead planned to allocate $46 million of the $56 million appropriated by Congress across just five grants, including $25 million for a law school. The remaining $10 million could go to a state or local agency.
HUD also sought to impose conditions requiring recipients not to use funding to support what the administration described as “gender ideology” or “illegal immigration.”
US District Judge Myong Joun blocked the changes after concluding that HUD had failed to provide a reasoned explanation or rely on relevant data when restructuring the programme.
Joun found that the changes effectively excluded housing organisations that had carried out the programme’s mission for years.
The Trump administration appealed, arguing that HUD had discretion over how the funds should be distributed and that the district court had improperly interfered with the agency’s administration of the programme.
The Justice Department argued that the order prevented HUD from exercising discretion granted to it by Congress.
However, a three-judge 1st Circuit panel declined to put most of Joun’s decision on hold while the government’s appeal continues.
The panel concluded that the administration had not demonstrated that it was likely to succeed in showing that Joun exceeded his authority when issuing the order.
The appeals court did grant the government limited relief concerning one element of the district court’s ruling.
Joun had required HUD to issue new funding notices for fiscal year 2025 using the previous 2024 system because the relevant funding was approaching a September 30 expiration date.
Congress subsequently extended that deadline until September 30, 2027, removing the immediate basis for that part of the order.
The appeals court therefore lifted that requirement while leaving most of Joun’s decision in place.
The ruling does not finally determine whether HUD’s proposed overhaul is lawful. It instead determines what the department can do while the administration’s appeal of the district court order continues.
A HUD spokesperson said the department would pursue all available legal options to defend the changes, citing responsible stewardship of taxpayer funds and efforts to improve fair housing enforcement.
The case will now continue before the 1st Circuit, where the administration is seeking to overturn the lower court ruling and regain authority to implement its proposed restructuring of the Fair Housing Initiatives Program.
Until that appeal is decided, most of the restrictions imposed by the district court remain in effect.