Four Fair Housing Groups Sue HUD and DOGE Over Canceling FHIP Contracts

Four fair housing organizations filed a class action lawsuit on March 13 against HUD and the Department of Government Efficiency (DOGE) following HUD’s sudden and unlawful termination of grants the organizations received to carry out activities under HUD’s Fair Housing Initiatives Program (FHIP). The class action lawsuit was brought on behalf of 66 fair housing groups whose FHIP grants were “arbitrarily terminated without notice, reason, or sensible explanation” on February 27, 2025 – jeopardizing $30 million in congressionally authorized funding intended to counter housing discrimination and enforce fair housing laws. The plaintiffs are seeking a temporary restraining order (TRO). Altogether, HUD terminated 78 FHIP grants, the primary source of funding for these fair housing organizations covering 33 states.  

The FHIP program originated as a result of Congress’s recognition of the central role of fair housing organizations in combatting housing discrimination. Every year since the program was created, Congress appropriated funds to the program, and HUD in turn provided those funds to organizations that used the money to identify and counteract various forms of housing discrimination, to counsel people seeking housing, to educate the public about fair housing law, and to enforce fair housing protections. HUD has managed FHIP, codifying “Fair Housing Act” statutory priorities in regulations and grant-related documents, and HUD has monitored fair housing groups’ efforts to achieve the Fair Housing Act’s priorities. 

The unexpected and abrupt cancellation of FHIP grants at the 66 organizations came through a form letter explaining that HUD was terminating the grants “at the direction of [the] Department of Government Efficiency, ‘pursuant to’ the executive order establishing that body.” HUD said the grants were being terminated because they no longer effectuate the “program goals or agency priorities.” 

However, in the Fair Housing Act, Congress explained that the purposes of FHIP grants are to: expand enforcement of the Fair Housing Act by enabling fair housing groups to identify and remedy “discrimination in public and private real estate markets and real estate-related transactions;” develop ways of “respond[ing] to new or sophisticated forms of discrimination;” bring enforcement capacity to underserved areas of the country; and conduct education and outreach to inform people that the Fair Housing Act exists, that they must follow it, and that it protects them. 

The complaint notes that Executive Order (E.O.) 14158 establishing DOGE does not give it any statutory authority, and it alleges that DOGE is not a federal agency and has no authority to direct any agency to do anything. The E.O. does not mention HUD or FHIP; instead, it concerns software systems and similar elements completely unrelated to FHIP.  

Each fair housing organization was sent an identical form Termination Notice stating that the action was taken at the direction of the president in pursuit of E.O. 14158, canceling their FHIP grant “because it no longer effectuates the program goals or agency priorities.” These Termination Notices did not refer to the FHIP statute, the implementing regulations, or any specific program goals or agency priorities, nor did they explain how the organizations’ activities fail to effectuate the program goals or agency priorities. The Termination Notices did not offer the fair housing organizations any advance notice or opportunity to correct any deficiency. The Termination Notices did not cite any of the terms and conditions of the awards, or any violation them. 

The lawsuit argues that the “Administrative Procedure Act” (APA) authorized the Court to hold unlawful and set aside final agency action that is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law.” The plaintiffs claim that HUD acted arbitrarily and capriciously by failing to provide a reasoned explanation for its termination decision. HUD’s two reasons for terminating the grant awards – that DOGE directed their termination and that the awards no longer effectuated program goals or agency priorities – reflect a failure to examine relevant data and articulate a satisfactory explanation for HUD’ actions, and HUD’s reasons fail to demonstrate a rational connection between any facts HUD may have found and the choice HUD made. 

The lawsuit further states that DOGE is purely a creation of executive order, and that no statute directed or contemplated its existence. Furthermore, DOGE has the limited functions of advising the president; it is not empowered to perform any other functions and has no authority in law to direct the operations or decisions of federal agencies. 

The four named plaintiffs, all members of the National Fair Housing Alliance, are the Massachusetts Fair Housing Center, the Intermountain Fair Housing Council (Idaho), Fair Housing Council of South Texas, and the Housing Research and Advocacy Center (Cleveland).  

Read the class action complaint at: https://tinyurl.com/mrh7953k. 

More information about FHIP is on page 8-5 of NLIHC’s 2024 Advocates’ Guide.