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A federal judge in Massachusetts has ordered roughly $30 million in grants that were stripped midstream from fair housing organizations reinstated, after organizations including a Holyoke-based center sued the Trump administration demanding the return of their grant funding.
On February 27, organizations received notifications that 78 Fair Housing Initiatives Program grants were being cut off. The rationale at the time was simply that each grant “no longer effectuates the program goals or agency priorities.”
Four nonprofits, tasked with the day-to-day work of upholding the 1968 Fair Housing Act prohibiting discrimination in home sales and rentals, argued that the US Department of Housing and Urban Development illegally slashed tens of millions of dollars in congressionally approved funding. The cuts, they said, struck a devastating blow at their efforts to investigate housing discrimination and educate members of the public about their rights, which depends on federal and state funding supporting those efforts.
US District Court Judge Richard G. Stearns ruled on Wednesday that HUD must reinstate any fair housing funding that was cut and barred the department from terminating the grants. The decision, he wrote, rests in part on a recent First Circuit Appeals Court rejection of every objection raised by the government in a similar case regarding Department of Education funding.
As these HUD funds are congressionally allocated – and have been appropriated by lawmakers for decades since the Reagan administration – the department is limited to only terminating HUD grants if Congress approves or if cuts are done in a way that’s consistent with the Administrative Procedure Act, relevant regulations, grant terms and conditions, and the judge’s order.
Lisa Rice, president and CEO of the National Fair Housing Alliance, applauded the ruling in a statement.
“Fair housing organizations are on the front lines of efforts to combat housing discrimination through enforcement of the Fair Housing Act,” she wrote. “Without their efforts, survivors of sexual harassment in housing; veterans with disabilities requiring accessible housing; and people of color seeking to buy a home free of racial harassment, and families with children would have no protection or anywhere to turn to uphold the law. The Trump Administration’s abrupt elimination of funding threatens drastic consequences for more than 75 fair housing groups around the country and creates fear, chaos, insecurity, and dysfunction in an already fragile housing market.”
Initial explanations in the termination letter offered few clues to the underlying reason for cutting these 78 grants. The Holyoke-based Massachusetts Fair Housing Center, which is one of four Bay State organizations that works to enforce the state’s expansive fair housing laws along with federal laws, was the only local group to have a contract targeted midstream.
Over that one February night, executive director Maureen St. Cyr said, they lost half of their annual budget when the remainder of a $1.3 million HUD grant was terminated.
The suit initially sought an injunction against HUD and the Department of Government Efficiency, which has been tasked with identifying areas of “wasteful” spending, to stop the cuts.
But after the government’s response, in which HUD Deputy Secretary Matthew Ammon said DOGE had no power to make the cuts but agreed with its assessment and "adopted their reasoning as my own" in slashing the funds, the housing groups adjusted their strategy to seek an injunction only against HUD. They are planning to pursue a separate suit against DOGE acting beyond its legal authority to interfere with the grants.
The grants were targeted, according to the filing from Massachusetts US Attorney Leah Foley, after DOGE determined they were “incompatible” with recent executive orders because they “include language that specifically imposes subjects such as ‘DEI.’” Foley also charged that the grants authorized funds for “training, enforcement, and other related activities in a manner for activities beyond the scope of the statutorily enumerated protections of the Fair Housing Act and other Civil Rights laws.”
The January executive order Foley cited refers to “illegal DEI and DEIA policies,” which it defines as “dangerous, demeaning, and immoral race- and sex-based preferences.”
But the Fair Housing Act itself prohibits discrimination on the basis of race and sex, including giving preferences on those bases, the housing group filing argued. “It is thus unclear,” the group wrote, “and the declaration does not explain, how the grants, which were made to further the non-discrimination purposes of the FHA, in fact promoted illegal race- and sex-based preferences.”
In objecting to the lawsuit, the government argued that the Massachusetts federal court had no jurisdiction to force HUD to pay out money due under a contract, based on previous court rulings. The government also argued that awarding the grants is up to the agency’s discretion and that instating a temporary restraining order would be inappropriate in part because it could not recoup the funds if it ends up winning in the end.
In a brief hearing on Tuesday afternoon, Judge Stearns quickly dispensed with the issue. At this stage, he said, every objection to the injunction was already raised and dealt with in a recent First Circuit Court of Appeals decision out of California.
That case concerned a lawsuit brought to halt over $600 million in federal cuts to the US Department of Education on an anti-DEI basis. The termination letters sent to over 109 programs canceled grants midstream because they were no longer “consistent with" or no longer “effectuate department priorities,” but do not specify why.
The appeals court rejected a motion to halt a lower court’s temporary restraining order on the grant fund cuts while the government appealed. The essence of the issue was not contractual, the court said, but rather that the government violated federal administrative procedure law, the First Circuit ruled in that case. The housing groups similarly argued that the HUD cuts were arbitrary in a way that violated administrative procedure.
The states that sued over education cuts were not seeking compensation, the First Circuit court wrote, but the release of already appropriated funds.Agencies also aren’t able to operate in an entirely discretionary way, the appeals court concluded, because there are regulations limiting grant terminations. Because the Massachusetts district court is bound by the First Circuit ruling, and Stearns said he saw “no meaningful way to distinguish this case” from the education case, he allowed the housing groups’ injunction.
With a 14-day temporary restraining order in place, and while the federal government mulls next steps, HUD has been ordered to reinstate the grants and notify all of the affected organizations.
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