A federal appeals court says the Trump administration cannot rewrite the rules for billions in local funding simply because cities refuse to adopt the president’s policies on transgender people, abortion and immigration.
The Trump administration cannot use federal housing and transportation grants as a political loyalty test for cities and counties that refuse to fall in line with its policies targeting transgender people.
That is the conclusion of a federal appeals court that largely upheld an injunction blocking the administration from attaching sweeping new ideological conditions to federal grants already awarded to local governments.
In a 2–1 decision issued Tuesday, August 25, the U.S. Court of Appeals for the Ninth Circuit ruled that the Department of Housing and Urban Development and Department of Transportation exceeded the authority Congress gave them when they attempted to impose new restrictions on billions of dollars in federal funding.
Those restrictions included requirements that recipients agree not to use certain federal funds to promote what the Trump administration calls “gender ideology,” along with conditions involving abortion, immigration enforcement and diversity, equity and inclusion programs.
The case is County of King v. Turner.
And while the ruling involves transportation projects and homelessness programs, its implications reach considerably further.
At its core, the court told the administration something remarkably simple:
The president does not get to rewrite Congress’s spending laws by executive order.
Billions of Dollars — With Ideological Strings Attached
The dispute grew out of executive orders issued after President Donald Trump returned to office in January 2025.
Federal agencies subsequently began attaching new conditions to grants awarded to cities, counties and local agencies.
Among them, HUD required some recipients to agree that:
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“The recipient or applicant shall not use grant funds to promote ‘gender ideology.’”
“Gender ideology” is the administration’s preferred term for policies recognizing transgender and nonbinary people.
Other conditions prohibited certain funding connected to elective abortion, required immigration-status verification and sought commitments involving cooperation with federal immigration enforcement.
Transportation grants were also tied to compliance with executive orders, including Trump’s January 2025 order titled Defending Women From Gender Ideology Extremism and Restoring Biological Truth to the Federal Government.
The practical message to local governments was difficult to miss:
Accept the administration’s policy agenda — or potentially lose federal money.
Thirty-one cities, counties and local agencies challenged the conditions.
The plaintiffs included New York City, Boston, Chicago, San Francisco, Denver, Minneapolis, Pittsburgh, Portland, San Jose and several counties and transportation agencies.
The Court: Congress Didn’t Authorize This
Writing for the majority, Circuit Judge M. Margaret McKeown framed the dispute as one between executive policy and congressional law.
“This appeal highlights the tension that arises when sweeping executive orders collide with statutory text.”
The problem for the administration was that Congress — not the president — controls federal spending.
Federal agencies can administer programs Congress creates. They can enforce conditions Congress actually placed on those programs.
What they generally cannot do is invent entirely new conditions because the president wants federal money used to advance his political agenda.
The court found that several of the challenged requirements went well beyond the authority Congress gave HUD and DOT.
As McKeown explained, the power to attach conditions to federal money is part of Congress’s constitutional spending authority.
Without congressional authorization, agencies cannot simply create those conditions themselves.
That distinction matters enormously.
The court was not deciding whether the Trump administration is allowed to oppose transgender-inclusive policies.
It was deciding whether federal agencies could transform those political preferences into mandatory conditions for receiving money Congress had already authorized for completely different purposes.
For most of the challenged conditions, the answer was no.
What Does ‘Promoting Gender Ideology’ Even Mean?
There is another problem buried inside the administration’s rule:
What exactly counts as “promoting gender ideology”?
The phrase is intentionally expansive enough to potentially encompass extremely ordinary interactions with transgender people.
The Ninth Circuit offered a striking example.
A restriction could conceivably be triggered when a transgender person visits a homelessness program and a case manager uses that person’s chosen name, helps them find safe shelter or coordinates access to counseling.
Those are not abstract culture-war debates.
They are the mundane decisions frontline workers make while helping actual human beings.
Under the administration’s approach, organizations receiving federal homelessness funding could be left wondering whether simply treating a transgender client with dignity might jeopardize their funding.
And the court identified an even more fundamental problem:
The government could not point to a federal law prohibiting the promotion of “gender ideology.”
Executive orders do not magically create one.
This Wasn’t Really About How the Money Was Spent
That distinction may be one of the most important parts of the ruling.
Congress created programs such as HUD’s Continuum of Care grants to address homelessness.
The administration attempted to attach restrictions concerning transgender people, abortion and immigration to that money after Congress had already established the program.
The Ninth Circuit concluded that those restrictions went far beyond ensuring that homelessness funding was actually being used to address homelessness.
Instead, federal agencies were attempting to leverage the money to advance unrelated administration priorities.
In other words:
Congress appropriated money to help communities provide housing, transportation and services.
The executive branch attempted to turn that money into leverage.
There Is One Important Limitation
The Ninth Circuit did not uphold every portion of the lower court’s injunction.
The appeals court said federal agencies can require recipients to comply with legitimate federal anti-discrimination laws when administering federally funded programs.
That is hardly controversial.
If Congress says organizations receiving federal financial assistance must comply with Title VI of the Civil Rights Act, agencies can enforce that requirement.
But the administration’s conditions went considerably further, attempting to reach programs and activities beyond those receiving the federal assistance.
The appeals court therefore sent that portion of the case back to the district court with instructions to narrow the injunction.
The larger restrictions — including the administration’s attempt to prohibit federal homelessness money from being used to “promote gender ideology” — remain blocked for the local governments covered by the litigation.
The Dissent
Circuit Judge Patrick Bumatay, a Trump appointee, disagreed with much of the majority’s reasoning.
He argued that federal agencies had greater discretion to determine how grant money should be administered and accused the majority of interfering with policy decisions belonging to the political branches.
In his view, HUD could reasonably conclude that money spent advancing issues such as “gender ideology,” abortion or immigration was money not being spent directly on housing homeless people.
But the majority rejected that framing.
The question wasn’t whether HUD officials thought the restrictions were reasonable.
The question was whether Congress gave HUD the legal authority to impose them.
Reasonableness cannot substitute for statutory authority.
Why It Matters
This case isn’t simply about whether a homeless shelter can use someone’s chosen name.
It is about whether federal funding can become a weapon for forcing state and local governments to adopt the president’s social policies.
The administration has repeatedly attempted to attach conditions involving transgender people, DEI, immigration and abortion to federal funding programs.
That strategy is powerful because cities and counties depend on federal grants for essential services.
Transportation.
Housing.
Homelessness programs.
Public health.
Emergency services.
Community programs.
A government does not necessarily need Congress to outlaw transgender-inclusive policies if it can threaten communities with the loss of billions of dollars for refusing to abandon them.
That is precisely why this ruling matters.
The Ninth Circuit did not declare transgender equality beyond political debate.
It did something much more structurally important.
It said executive agencies cannot simply take money Congress appropriated for one purpose and use it as leverage to impose unrelated presidential policies that Congress never enacted.
For transgender people, that means a city should not have to decide whether respecting us is worth losing the money keeping its shelters open.
For everyone else, the principle is just as important.
Because once federal grants can be transformed into political loyalty tests by one administration, they can be transformed into political loyalty tests by the next.
Congress controls the purse.
Executive orders do not rewrite statutes.
And, at least in this case, the courts are still willing to enforce that line.
Sources: U.S. Court of Appeals for the Ninth Circuit, County of King v. Turner, No. 25-3664, filed August 25, 2026; Reuters reporting on the decision and affected federal grant programs.
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