A federal appeals court ruled Tuesday that the Trump administration cannot require local governments to adopt its positions on immigration, gender, and abortion as a condition for receiving billions of dollars in federal grants. The 2-1 decision from a panel of the 9th U.S. Circuit Court of Appeals largely upheld an earlier injunction that stopped the U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of Transportation from enforcing these new requirements on New York, San Francisco, and 29 other local governments.
The funding dispute began in early 2025 after President Donald Trump signed executive orders following his return to office. Federal agencies subsequently introduced new requirements for grant recipients, including mandates to verify the immigration status of individuals receiving support and to certify that funds would not be used for "gender ideology," "elective abortions," or "illegal immigration." The local governments sued, arguing these conditions were not authorized by Congress.
U.S. Circuit Judge M. Margaret McKeown wrote for the majority that the executive branch lacked the authority to impose most of these conditions, noting that the requirements far exceeded the statutory limits set by Congress and were added after grants had already been awarded. In a dissent, U.S. Circuit Judge Patrick Bumatay argued that the court was overstepping its bounds by interfering with the executive branch's discretion to manage the federal "purse." The court did send the case back to a lower court to narrow the injunction specifically regarding the requirement that cities comply with federal anti-discrimination laws, such as Title VI of the Civil Rights Act.
For residents in the affected jurisdictions, the ruling means that day-to-day public services funded by these grants, such as homeless shelters and transportation projects, are likely to continue without the immediate threat of sudden budget cuts due to non-compliance with the administration's social policies. A city worker or a recipient of housing assistance would notice the preservation of existing benefits and program availability rather than a sudden shift in eligibility rules or service closures. The ruling prevents the administration from retroactively adding "onerous requirements" to funds that have already been allocated by Congress for specific public purposes.
The decision sets a legal precedent regarding the limits of executive power to use federal funding as a tool to enforce policy priorities that have not been explicitly legislated. While the court allowed for general non-discrimination certifications under the Civil Rights Act, it restricted the administration from adding specific ideological conditions. What happens next is a return to the U.S. District Court in Seattle, where Judge Barbara Jacobs Rothstein will narrow the injunction as instructed. The Transportation Department stated it remains committed to ensuring taxpayer dollars are not used for practices it deems discriminatory, while HUD has not yet issued a public response to the ruling.