Federal judge pauses some Trump administration grant conditions for coalition of cities, counties

SAN FRANCISCO (CN) — A federal judge on Tuesday granted a temporary restraining order against the Trump administration over its attempt to withhold funding from localities that don’t comply with executive orders and other policy preferences.

A coalition of U.S. cities, counties, and other entities led by Fresno, California, sued the government on Aug. 20, claiming that federal agencies violated the Constitution by imposing “vague and unauthorized conditions” on federal grants to pressure the cities to comply with the administration’s policy preferences.

U.S. District Judge Richard Seeborg, a Barack Obama appointee, found the coalition was likely to succeed on some of its claims.

“In the context of a dynamic situation, the temporary order seeks to preserve the status quo and protect the power of the legislative branch,” he said in his written order Wednesday.

Joining Fresno were California cities Eureka and South Lake Tahoe, along with Sacramento County; Monroe County and its Airport Authority in New York; and St. Paul, Minnesota.

The federal agencies named in the lawsuit include the Department of Housing and Urban Development, the Department of Health and Human Services, the Environmental Protection Agency and the Department of Transportation.

Seeborg said the agencies “took heed” of five executive orders issued between January and August 2025, announcing new grant conditions that required recipients to certify “that they do not operate any DEI programs, do not ‘promote’ ‘gender ideology’ or ‘elective abortion,’ are required to cooperate with federal immigration enforcements, and are liable for non-compliance under the False Claims Act.”

Under the restraining order, the agencies are prohibited from imposing the grant conditions — including by withholding or canceling funds, or by punishing plaintiffs in refusing their grants — until Sept. 23.

Lyndsey Olson, the city attorney for St. Paul, told Courthouse News the city was pleased with the ruling.

“This decision underscores the seriousness of the issues raised in our case and provides immediate protections for our community while the litigation proceeds,” she said.

Attorneys for the other plaintiffs and the defense did not immediately respond to requests for comment.

According to the complaint, the City of Fresno received an email from the Department of Housing and Urban Development on Aug. 18 questioning the city’s certification that federal funds from the Community Development Block Grant would be allocated in accordance with the law.

The city claims the agency told it to remove all references to the words “equity,” “environmental justice,” and references to transgender people, and affirm that Fresno would not use funds to promote “gender ideology,” as defined by Executive Order 14168 — or risk the government withholding funds.

“For years, plaintiffs have relied on congressionally authorized grant programs to deliver core public services that safeguard public safety and health, connect residents to opportunity, and sustain local economies. They have endeavored to work cooperatively with federal agencies to administer these programs, but the lawful and predictable administration of these grants has now been upended,” the plaintiffs say in their complaint.

In a hearing Tuesday, Ryan McGinley-Stempel of San Francisco’s Renne Public Law Group, said the plaintiffs had a “Hobson’s choice” of having to certify unlawful conditions or forgo federal funds.

“Just having to be put to that choice is irreparable harm. That uncertainty abounds, and these deadlines are fast approaching,” he said.

The government argued that localities could resubmit plans that aren’t approved and that deadlines are not imminent.

“We dispute that the choice between accepting federal funds and forgoing those funds if the parties disagree with conditions set forth is irreparable harm,” said Charlie Merritt, an attorney for the Department of Justice.

Merritt said the Federal Aviation Administration would extend certain deadlines, when Seeborg interrupted him, asking why the government did not agree to a “stand-down” while the litigation played out .

“Is it the government’s position that they will agree to freeze activity while we go through the process, or no?” Seeborg said. “If the answer is no, I don’t see how the plaintiffs can take any solace when you say you won’t do anything.”

“If you’re saying nothing is going to happen anyway, I’m not sure why there would be any prejudice to you," Seeborg added.

Merritt said he could not say broadly that agencies would freeze all activity but that a temporary restraining order was unnecessary.

McGinley-Stempel said Merritt’s statement was the first he heard about FAA extensions.

“The ground is shifting on a daily basis beneath my client’s feet,” he said. “It’s still not clear to us that we won’t be subject to action, maybe even retaliation by the administration. There is not any appreciable harm on the government to put a temporary pause on relying on these unlawful grant conditions.”

The government also says there are ways to accept the federal funds and then dispute the terms and conditions attached to those funds.

Seeborg pushed back on that argument.

“Their argument is, if they accepted the funds under the conditions that mandate compliance with these executive orders, they could be exposed to claims. That puts them in, to borrow their phrase, a ‘Hobson’s choice,’” he said.

“In order for the funds to flow, don’t they have to certify that they are in compliance with the conditions that are reflected in the particular executive orders at issue here?” he asked.

McGinley-Stempel said it was “unclear” how to bring a claim to change the terms of the contracts after they were signed.

The government raised an issue with the scope of relief the plaintiffs requested, saying a temporary restraining order would be too broad.

“They aren’t saying all executive orders; they are saying specific executive orders that create uncertainty or conflict with congressional directives," Seeborg said.

McGinley-Stempel agreed that any temporary relief could be confined to specific conditions, saying that the plaintiffs “are not trying to put a pause on every executive order under the sun.”

“The harm is here and now," McGinley-Stempel said. “Putting a brief pause in place would prevent irreparable harm without putting undue harm on the government.”

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