Housing groups say they have a new legal argument to challenge the Trump administration’s move to cancel more than $56 million in funding last month with a “pocket rescission” — and they got a judge to order the government to keep the funding from lapsing for now.
The lawsuit, filed by the National Urban League and groups from several states, argues that the administration’s decision to rescind the funding appropriated by Congress is unlawful under the First Amendment, because the White House cited housing groups’ engagement in “DEI-centric discriminatory agendas” as reasoning for the drastic cuts.
“What comes out of this will likely be new law,” said Lindsay Zimliki, one of the attorneys representing the housing groups.
The lawsuit, which came the day before federal funding for the Department of Housing and Urban Development’s Comprehensive Housing Counseling program was set to expire, is one of the latest attempts to challenge the pocket rescissions.
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Under a previous separate challenge last year, the D.C. Circuit held that plaintiffs could not use the Administrative Procedure Act to challenge the rescission process. This time, the housing groups claim that the government discriminated against them and retaliated for their viewpoints.
“This is not a case about whether the federal government may subsidize speech that advances policies the Administration disfavors; it is a case of the Administration defunding and shutting down a program because it does not like the non-program-related viewpoints of the organizations that receive the funding,” the lawsuit says.
U.S. District Judge Jia M. Cobb ordered the administration to suspend the Sept. 30 funding lapse for the HUD program while the lawsuit moves forward.
The federal program funds nonprofits that help Americans with foreclosure prevention, mortgage counseling and buying and renting homes. The attempted cuts in this case are a fraction of $810 billion that the White House has sought to recoup from several agencies’ programs across the country. Using a pocket rescission allowed the Office of Management and Budget to withhold funds until they expired at the end of the fiscal year.
The Government Accountability Office found that those rescissions amounted to a violation of spending law.
In court filings in the latest lawsuit, the Trump administration argued that the court “lacks statutory authority to suspend appropriations deadlines” and “control disputes” over the White House’s funding decisions.
And the administration asked Cobb to deny the plaintiffs’ First Amendment claim, stating that the housing group’s free speech rights were not affected by the rescission.
As part of the reasoning to withhold funding for the housing groups, the administration also argued that the program was “wasteful” and had “nothing to do with the grantees’ viewpoint.”
“While Plaintiffs may have hoped for a subsidy from the Government to spread their message, they certainly were never entitled to one, and the Government does not violate the First Amendment by not providing one,” a Friday filing states.
Normally, when the White House proposes rescinding money that Congress appropriated, Congress has 45 days to vote on it. However, this rescission’s announcement came five days before the funds lapsed.
With the pocket rescission announcement coming so close to the end of the fiscal year, attorneys representing the housing groups said in an interview that notice of funding — which is how the different groups can apply for federal money — was “about six to seven months late,” and that grantees had covered services with the expectation of being reimbursed with funding that was never awarded.
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