A federal court has granted a HUD fair housing TRO that prevents the Department of Housing and Urban Development from replacing its longstanding Private Enforcement Initiative grant programme with a radically condensed funding structure that would have channelled $25 million to a single law school. Judge Myong J. Joun of the United States District Court for the District of Massachusetts issued the Temporary Restraining Order on Wednesday after finding that the National Fair Housing Alliance (NFHA) was likely to succeed on its claim that HUD had acted arbitrarily and capriciously under the Administrative Procedure Act.
What the HUD Fair Housing TRO Actually Decided
At the centre of the dispute is HUD’s FY2025 Notice of Funding Opportunity for the Fair Housing Initiatives Program (FHIP). According to the NFHA’s account of the lawsuit, the new structure contemplated using $46 million of the $56 million FY2025 FHIP appropriation for just five grants, replacing the prior practice of awarding more than 100 grants ranging from $75,000 to $425,000. One of those five awards would be worth $25 million, made available to a single favoured law school. A further $10 million would fund a single Administrative Enforcement Initiative award to a state or local agency.
Judge Joun found that HUD failed to ‘adequately explain the [funding] structure when it took action,’ not when ‘defending the action in court.’ The department’s reliance on what the court termed the ‘Roth declaration’, an affidavit offered after the fact, was found to be impermissible post-hoc rationalisation.
The court also found against HUD on reliance interests. The NFHA and its member organisations had structured their work around FHIP-funded grants for years, and courts reviewing agency policy changes are required to account for those established expectations. Judge Joun found HUD had not addressed those interests at all.
On pretext, the judge was direct. HUD claimed the restructure would broaden participation in fair housing enforcement, but Judge Joun concluded that ‘excluding almost all existing fair housing organisations will certainly not strengthen fair housing work.’
The court further dismissed HUD’s new conditions relating to immigration status, faith, and gender ideology as outside the scope of agency discretion. HUD had argued those conditions ensured legal compliance, but Judge Joun found no adequate explanation of their relevance to the FHIP’s statutory mandate.
Distinguishing Lincoln v. Vigil and the Scope of Agency Discretion
HUD’s principal defence rested on the proposition that funding allocations from a lump-sum congressional appropriation are committed to agency discretion and therefore unreviewable under section 701(a)(2) of the Administrative Procedure Act. The department cited Lincoln v. Vigil, 508 U.S. 182 (1993), in which the Supreme Court held that the Indian Health Service’s reallocation of funds from a lump-sum appropriation was unreviewable on precisely those grounds.
Judge Joun distinguished the current case. Unlike the appropriation in Lincoln, the FHIP statute specifically names the Private Enforcement Initiative as a programme Congress expected to receive funding. That express statutory reference, the court reasoned, takes the allocation decision outside the ambit of unreviewable lump-sum discretion. The judge also rejected HUD’s textual argument that the word ‘may’ in the relevant provision rendered PEI grants purely discretionary, agreeing with NFHA that PEI is a ‘necessary component of the fair housing enforcement system.’
The court additionally found that the funding halt caused irreparable harm to both the plaintiff organisations and individuals relying on them for fair housing assistance.
According to the NFHA’s cases and settlements page, the court vacated the FY2025 FHIP funding notices and ordered HUD to allocate FY2025 FHIP funds using its FY2024 funding structure.
Third Action in a Pattern of FHIP Challenges
The complaint in the current action was filed on 23 July 2026 by Relman Colfax PLLC on behalf of NFHA and the Massachusetts Fair Housing Center. The firm has described it as HUD’s third direct assault on the FHIP under the current administration.
An earlier, separate action followed HUD’s abrupt termination of existing FHIP grants. A class action filed on behalf of 66 fair housing groups in March 2025 alleged that HUD and the DOGE Task Force had terminated grants on 27 February 2025, placing $30 million in congressionally authorised funding at risk. Judge Richard G. Stearns of the same court issued a TRO on 26 March 2025 reinstating 78 FHIP grants; HUD restored those grants the following day, according to a report by the National Low Income Housing Coalition. A further lawsuit in June 2025, also brought by Relman Colfax, challenged HUD’s freeze on second and third-year multi-year grant payments, as reported by NAR Focus.
NFHA president Lisa Rice welcomed Wednesday’s ruling: ‘This ruling means the people who answer that call are still going to be there to answer it and serve people desperately seeking protection from unlawful housing discrimination.’
The TRO expires in September, at which point NFHA must secure a preliminary injunction to maintain the court’s protection. Subject to any onward appeal by HUD, the merits of the arbitrary and capricious challenge will then determine whether the department can proceed with its restructured funding approach.
