Fair-housing groups urge First Circuit to stop Trump cuts

BOSTON (CN) — Dozens of nonprofit fair-housing organizations asked the First Circuit on Wednesday to restore funding summarily cut off by the Trump administration, in a lengthy and highly technical oral argument that appeared to leave a panel of three Joe Biden appointees more uncertain about what to do than they were to begin with.

In 1992, Congress authorized the Department of Housing and Urban Development to make grants to nonprofit fair-housing groups to help enforce housing laws by bringing discrimination suits and conducting education programs. But many of these grants were terminated this year as a result of DOGE recommendations.

A group of 66 nonprofits sued in federal court and won a temporary restraining order on March 26. Nine days later, however, the Supreme Court voted 5-4 to lift a stay in a similar case, and on April 14 the trial judge in this case dissolved the restraining order. He suggested, based on the Supreme Court’s comments, that this suit should have been brought instead in the Court of Federal Claims, which handles federal contract disputes.

The nonprofits appealed to the First Circuit, arguing the case was properly brought because the Court of Federal Claims is for money damages and they don’t want damages — they want an injunction to restore the ongoing grants.

In the meantime, HUD temporarily restored the grants, although it says it might still cancel them.

The problem for the appeals panel was that the trial judge rescinded his original restraining order but neither dismissed the case not denied a further order — making it unclear what exactly the First Circuit was reviewing.

“The First Circuit can’t just take a case because the parties want us to,” observed U.S. District Judge Samantha Elliott of New Hampshire, who was sitting by designation. “That’s not how jurisdiction works.”

The plaintiffs’ lawyer, Lila Miller of Relman Colfax in Washington, said the plaintiffs brought the appeal without asking the trial judge for a further ruling out of a need for speed and that the judge’s actions amounted to an appealable order.

U.S. Circuit Judge Seth Aframe called the move troubling. “By rushing to get here without turning all the square corners … I’m not sure that’s best," he said.

HUD’s lawyer, Brian Springer, argued that since the agency had temporarily restored the grants, the plaintiffs no longer had any grounds for emergency relief and the panel judges should dismiss the appeal because there was no relief they could provide them.

But while the trial court never actually dismissed the case for lack of jurisdiction, the panel nevertheless moved on to a protracted debate over whether the case was a contract dispute that belonged in the Court of Federal Claims — and they sounded skeptical despite the Supreme Court’s suggestions.

This case was different from the Supreme Court case because the plaintiffs weren’t seeking past-due payments, noted U.S. Circuit Judge Julie Rikelman. HUD itself told them in its termination letters that it would pay them for past services.

“Correct, but you could imagine disputes,” Springer suggested.

Aframe asked why the grants were terminated, and Springer said it was because they were no longer in keeping with agency priorities, a justification that was specified in federal regulations and incorporated into the grant contracts.

“So you can convert any regulatory claim into a contract claim just by cutting and pasting the language into the contract and making people sign it?” asked Aframe, a little incredulously.

Rikelman tried to pin Springer down on the difference between a general grant (such as a block grant) and a contract.

Springer answered, “I think the reasons these fall on the side of contracts is they spell out all sorts of things, you’ll do this and get paid then, there’s performance and timing, bases for terminating, trades back and forth, so it looks like any traditional contract.”

Rikelman then asked what would happen if HUD terminated a grant on the basis of the recipient’s race and the recipient filed an equal protection claim. “Would that go to the Court of Federal Claims?”

Springer squirmed under Rikelman’s questioning, finally answering: “It depends on the specifics.”

But, he added, “This court doesn’t need to reach those issues.”