Trump Administration Faces New Lawsuit from 20 States

[Thiệu Ngô]

A coalition of 20 states and Washington, D.C., filed a federal lawsuit Tuesday seeking to block the Trump administration from imposing sweeping changes to a long-standing homelessness program, arguing the revisions would illegally upend support for tens of thousands of vulnerable Americans.

By Gabe Whisnant

The lawsuit, filed in Rhode Island, targets the Department of Housing and Urban Development’s overhaul of the Continuum of Care (CoC) grant system, a multibillion-dollar program that has funded permanent supportive housing and related services for decades.

Why It Matters

Local governments and nonprofit housing providers have raised similar alarms in recent weeks, warning the uncertainty surrounding the new rules has already slowed contract planning and could force agencies to scale back or shutter key programs. Officials in several major cities say the new limits on permanent housing funding could increase evictions and strain shelter systems heading into winter.

What To Know

The states say HUD’s new rules sharply reduce the amount of federal funding that can be used for permanent housing and instead redirect money toward transitional shelters and short-term programs. The complaint asserts the administration acted “in violation of congressional intent” by capping permanent housing spending and imposing “unlawful conditions” on which jurisdictions and service providers are eligible to receive grants. Among those conditions is a requirement that local authorities recognize only two genders—an eligibility restriction the states argue would penalize communities that protect transgender and nonbinary residents.

Newsweek has reached out to HUD via email on Tuesday afternoon for comment.

According to the filing, the revised criteria could jeopardize housing for more than 170,000 people nationwide and disrupt programs that local governments rely on to keep families, veterans and people with disabilities off the streets. The CoC program, created under federal law in 1987, has historically prioritized a “housing first” model intended to rapidly place people into permanent housing without preconditions such as sobriety, employment or treatment compliance.

State officials say the administration’s rule changes represent a dramatic departure from that approach. Rhode Island Attorney General Peter Neronha condemned the policy shift, saying the federal government is “punching down by targeting the most vulnerable Americans,” and warned the cuts would worsen an already dire homelessness crisis in his state. New York Attorney General Letitia James, who is helping lead the coalition, said the administration lacks authority to impose ideological requirements on grants Congress intended to be awarded based solely on need.

The lawsuit argues HUD’s actions violate the Administrative Procedure Act and the Constitution’s spending clause by conditioning federal dollars on the adoption of policies unrelated to housing need. The states also contend that the administration failed to justify its changes with research or data demonstrating that reducing permanent housing investments would improve homelessness outcomes.

What Happens Next

The states are asking the court to block the new rules while the case proceeds, arguing that the changes threaten to dismantle a foundational pillar of the nation’s homelessness-response system.