WASHINGTON — A federal judge ruled Tuesday that the Trump administration had illegally demanded that groups seeking homelessness grants comply with its agenda on immigration enforcement, transgender rights and other unrelated issues.

The ruling by Judge Mary S. McElroy of U.S. District Court in Rhode Island affects only $75 million of housing funds approved by Congress on a one-time basis in 2023. She ordered the Department of Housing and Urban Development to hold a new competition for the money without what she called “arbitrary and capricious” criteria subject to “slapdash imposition of political whims.”

Her ruling carries added interest as she presides over a much larger case that raises similar issues in the main federal homelessness program.

That program, called the Continuum of Care, awards nearly $4 billion a year, and the Trump administration has proposed similar changes to its rules, to penalize groups at odds with its positions on race and gender. In that case, McElroy has temporarily prevented HUD from rewriting the grant-making criteria, but has not made a final ruling.

Both suits were brought by a coalition of nonprofit groups, including the National Alliance to End Homelessness and Democracy Forward.

Ann Oliva, CEO of the alliance, said that she was “incredibly pleased” with Tuesday’s ruling.

“We will continue to fight to make sure that HUD is held accountable for lawfully awarding funds that were appropriated by Congress,” she added.

An HUD spokesperson did not respond to a request for comment.

In addition to testing the administration’s efforts to impose its political will, the case has also showcased the lack of bureaucratic urgency toward a problem of emergency proportions. The last federal count that was released publicly showed homelessness at a record high of about 772,000 people.

Congress intended the $75 million program, called CoC Builds, to provide housing to elderly and disabled people who are homeless. HUD held the first competition for the funding during President Joe Biden’s tenure but did not select winners. The Trump administration held a second competition and told members of Congress who had won.

Then it changed course, dropped the winners and announced plans for a third competition, with new rules and just a week to apply. Those rules, issued last September, disqualified groups in cities or states that failed to enforce camping bans or cooperate with federal immigration enforcement. The administration also penalized programs that failed to map sex offenders or “promote the notion that sex is a mutable or chosen characteristic.”

In suing, organizations seeking the housing funds complained that they had no control over the immigration laws in surrounding jurisdictions, and that their treatment of transgender staff members or clients was irrelevant to ending homelessness. After temporarily placing the change on hold last September, McElroy ordered HUD on Tuesday to conduct a fourth competition for the same modest pot of money.

In rewriting the rules for the CoC Builds program, HUD in effect foreshadowed an effort to use homelessness funds as a tool of ideological compliance.

The rules for the $4 billion Continuum of Care program, issued last December, shifted large sums away from permanent housing toward programs that condition aid on sobriety or mental health treatment. In doing so, they also contain similar barriers for groups that “use a definition of sex other than as binary in humans” or “facilitate racial preferences.”

Oliva and others filing suit estimated that as many as 170,000 formerly homeless people could lose their housing as a result of that rule shift. While McElroy temporarily stopped the change, she has not ruled on whether HUD has the authority to make such a sweeping change away from permanent housing.

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This article originally appeared in The New York Times.

By Jason DeParle/Jim Wilson
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