A federal appeals court has refused to let the Trump administration proceed with most of its proposed changes to a long-running US housing discrimination grant programme, preserving a judicial block on plans that could redirect millions of dollars away from more than 100 non-profit organisations.
The US Court of Appeals for the First Circuit, based in Boston, largely rejected the administration’s request to suspend an earlier ruling that prevented the Department of Housing and Urban Development (HUD) from restructuring the Fair Housing Initiatives Program (FHIP).
The three-judge panel concluded that the government had not demonstrated a sufficient likelihood of success in arguing that the lower court had exceeded its authority. However, it lifted one part of the earlier order that required HUD to issue funding notices for the 2025 financial year under the previous grant system.
The dispute began after the National Fair Housing Alliance and the Massachusetts Fair Housing Center challenged HUD’s proposed changes in July, arguing that the restructuring would undermine established efforts to combat housing discrimination.
In August, US District Judge Myong Joun ruled in favour of the organisations, finding that HUD had failed to provide a reasoned explanation or rely on relevant data to justify its new funding approach.
Major shift in grant allocation
Established by Congress in 1987, the Fair Housing Initiatives Program has provided multi-year grants to organisations working to enforce the Fair Housing Act and assist people who believe they have faced discrimination in housing.
Under the traditional arrangement, HUD generally distributed more than 100 grants, with individual awards ranging from $75,000 to $425,000. The funding supported organisations involved in investigating complaints, assisting affected individuals and pursuing fair housing enforcement efforts.
The department proposed a substantially different model for the 2025 financial year. Rather than continuing to fund private enforcement initiatives and multi-year grants through FHIP, HUD planned to direct $46 million of the $56 million appropriated by Congress towards just five grants. One proposed award, worth $25 million, was earmarked for a law school, while the remaining $10 million could be allocated to a state or local agency.
The administration also sought to attach additional conditions to the funding, including restrictions preventing recipients from using the money to support what it described as “gender ideology” or “illegal immigration.”
Judge Joun found that the proposed restructuring would effectively exclude organisations that had carried out the programme’s mission for years.
Administration argues HUD has funding discretion
Following the district court’s decision, the Trump administration appealed, maintaining that HUD possessed the discretion to determine how the appropriated money should be distributed.
The Justice Department argued that the lower court’s orders interfered with the department’s administration of a national programme and prevented it from exercising the authority granted by Congress.
The First Circuit declined to suspend most of the district court’s restrictions, leaving the central challenge to HUD’s restructuring in place while the appeal proceeds.
However, the panel agreed to remove the requirement that HUD issue new funding notices under the 2024 framework. That direction had been imposed as the existing funding was approaching its September 30, 2026 deadline.
The administration subsequently argued that a congressional funding measure had effectively extended the relevant funding period until September 30, 2027, removing the basis for that particular requirement. The appeals court accepted this part of the request.
A HUD spokesperson said the department intended to pursue all available legal options to defend its revised grant programme, citing its commitment to responsible use of taxpayer funds and improved enforcement of fair housing protections.
The appeals court’s decision leaves the broader dispute unresolved. While most of the restrictions on HUD’s proposed overhaul remain in effect, the administration continues to challenge the lower court’s authority to limit its funding decisions.
