Appeals court keeps block on Trump HUD grant overhaul, pauses replacement mandate
The First Circuit left most of a lower-court order against HUD’s 2025 fair-housing grant changes in place, while temporarily pausing the requirement that the agency issue replacement notices using its 2024 structure.
A federal appeals court on Monday, October 19, kept most of a lower-court order blocking the Trump administration’s overhaul of a fair-housing grant program, but temporarily paused one part that required the Department of Housing and Urban Development to issue replacement funding notices under its previous structure.
The three-judge panel of the U.S. Court of Appeals for the First Circuit granted HUD’s request for a stay only in part. It suspended the directives requiring new fiscal 2025 Notices of Funding Opportunity using the fiscal 2024 framework while the appeal proceeds. The judges denied the rest of HUD’s stay request, leaving the lower court’s vacatur of the challenged 2025 notices in effect.
What the appeals court decided
Chief Judge David Barron and Judges William Kayatta Jr. and Julie Rikelman said HUD had not made the strong showing of likely success needed to pause the remainder of the district court’s orders. The panel said the government had not shown that the funding decisions were insulated from judicial review, that the lower court lacked authority to vacate the notices, or that its arbitrary-and-capricious analysis was likely wrong.
The appellate order emphasized that HUD’s stay motion did not substantially address the district court’s finding of pretext. A stay decision is preliminary: it controls what happens while the appeal is pending and does not finally resolve whether HUD’s funding changes were lawful. The panel invited either side to seek expedited briefing on the merits.
The dispute over fair-housing grants
The Massachusetts Fair Housing Center and National Fair Housing Alliance sued HUD and Secretary Scott Turner over fiscal 2025 notices for the Fair Housing Initiatives Program. The program supports private organizations that investigate housing discrimination, conduct education and outreach, and build the capacity of fair-housing groups.
The plaintiffs alleged that HUD sharply changed the number, size and categories of grants, imposed restrictive eligibility and scoring criteria, and eliminated core awards on which local fair-housing organizations relied. Those are the plaintiffs’ characterizations of the policy; HUD has defended its discretion to design and administer the grants.
On August 26, U.S. District Judge Myong J. Joun vacated the challenged notices and ordered HUD to use the fiscal 2024 structure when allocating the money. On September 14, after intervening budget legislation shifted the timing of available funds, Joun denied the administration’s request to reconsider and directed HUD to continue implementation in good faith.
HUD argued that the new appropriations law undercut the lower court’s reasoning, that grantmaking rules and congressional-notification requirements complicated the timetable, and that the Administrative Procedure Act did not authorize a judge to prescribe the agency’s funding structure. The district court rejected those arguments, although it did not require HUD to award money to named recipients on a fixed date.
What happens next
The result is a split interim outcome. HUD does not presently have to publish replacement fiscal 2025 notices using the old framework, because that affirmative requirement is stayed. But the administration did not obtain the broader stay it sought, and the disputed 2025 notices remain vacated while the appeal continues.
That distinction matters for organizations seeking grants. Monday’s order prevents the old notices from taking effect, but it also delays the lower court’s chosen mechanism for moving replacement notices forward. The next practical steps will depend on whether the court accelerates the appeal and how HUD responds to the portions of the district court’s rulings that remain operative.
Reuters independently reported the mixed ruling after the First Circuit entered its order. The controlling public record is the court’s three-page order in Massachusetts Fair Housing Center v. Department of Housing and Urban Development, case No. 26-2084.
Sources and image credit
Primary records: the First Circuit’s October 19 order, the appellate case docket and the district court’s September 14 memorandum. Independent news confirmation: Reuters.
Image: Exterior of the Robert C. Weaver Federal Building, HUD headquarters in Washington, photographed by HUD staff, via Wikimedia Commons and the U.S. National Archives. Public domain as a U.S. government work. Center-cropped and resized to 1600×900; no text added.