Preliminary_Injunctions.pdf

ORDER GRANTING PLAINTIFFS’

MOTIONS FOR PRELIMINARY INJUNCTION

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The Honorable Barbara J. Rothstein

UNITED STATES DISTRICT COURT

WESMTERN DISTRICT OF WASHINGTON

AT SEATTLE

MARTIN LUTHER KING, JR. COUNTY;

PIERCE COUNTY; SNOHOMISH COUNTY;

CITY AND COUNTY OF SAN FRANCISCO;

COUNTY OF SANTA CLARA; CITY OF

BOSTON; CITY OF COLUMBUS; and CITY

OF NEW YORK,

Plaintiffs, vs.

SCOTT TURNER in his official capacity as Secretary of the U.S. Department of Housing and Urban Development; the U.S.

DEPARTMENT OF HOUSING AND URBAN

DEVELOPMENT; SEAN DUFFY in his official capacity as Secretary of the U.S.

Department of Transportation; the U.S.

DEPARTMENT OF TRANSPORTATION;

MATTHEW WELBES in his official capacity as acting Director of the Federal Transit Administration; and the FEDERAL TRANSIT ADMINISTRATION, Defendants.

NO. 2:25-cv-814

FIRST AND SECOND MOTIONS FOR

PRELIMINARY INJUNCTION

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I. INTRODUCTION

Plaintiffs King County, New York City, Denver, and 28 other counties, cities, and local housing and transportation agencies bring this action to challenge the Trump administration’s imposition of what Plaintiffs claim are unlawful and politically motivated funding conditions on an estimated $4 billion in critical federal grants. Plaintiffs contend that these funding conditions seek to compel compliance with the administration’s political agenda, including mandates to prohibit “promotion” of “gender ideology” and “elective abortions,” and to verify that “any

Federal public benefit” will not be provided to any “ineligible alien.” Plaintiffs claim that these funding conditions are unrelated to the underlying grants, which were conditionally awarded earlier this year by Defendants U.S. Department of Housing and Urban Development (“HUD”) and the U.S. Department of Transportation (“DOT”), including through DOT agencies, the

Federal Transit Administration (“FTA”), Federal Highway Administration (“FHWA”), Federal

Aviation Administration (“FAA”), and Federal Railroad Administration (“FRA”).1 These grants

1Plaintiffs are Martin Luther King, Jr. County, Washington (“King County”), Pierce County, Washington (“Pierce County”), Snohomish County, Washington (“Snohomish County”), City and County of San Francisco, California (“San Francisco”), County of Santa Clara, California (“Santa Clara”), City of Columbus, Ohio (“Columbus”), City of Boston, Massachusetts (“Boston”), City of New York, New York (“NYC”), City and County of Denver, Colorado (“Denver”), the Metropolitan government of Nashville and Davidson County, Tennessee (“Nashville”), Pima County, Arizona (“Pima County”), County of Sonoma, California (“Sonoma”), City of Bend, Oregon (“Bend”), City of Cambridge, Massachusetts (“Cambridge”), City of Chicago, Illinois (“Chicago”), City of Culver City, California, (“Culver City”), City of Minneapolis, Minnesota (“Minneapolis”), City of Pittsburgh, Pennsylvania (“Pittsburgh”), City of Portland, Oregon (“Portland”), City of San Jose, California (“San Jose”), City of Santa Monica, California (“Santa Monica”), City of Pasadena, California (“Pasadena”), City of Tucson, Arizona (“Tucson”), City of Wilsonville, Oregon (“Wilsonville”), Central Puget Sound Regional Transit Authority located in King, Pierce, and Snohomish Counties, Washington (“CPSRTA”), Intercity Transit located in Thurston County, Washington (“Intercity Transit”), Port of Seattle, Washington (“Port of Seattle”), King County Regional Homelessness Authority located in King County, Washington (“King County RHA”), Santa Monica Housing Authority, California (“Santa Monica HA”), San Francisco County Transportation Authority, located in the City and County of San Francisco, California (“SFCTA”), and Treasure Island Mobility Management Agency located in Treasure Island and Yerba Buena Island, California (“TIMMA”) (collectively “Plaintiffs”). Dkt. No. 71 (“Amend. Comp.”) ¶¶ 8-38.

Defendants are HUD, DOT, Scott Turner in his official capacity as Secretary of HUD, Sean Duffy in his official capacity as Secretary of DOT, FTA, Tariq Bokhari as the acting Director of FTA, FHWA, Gloria M. Shepard as the

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- 3 support vital programs in urban centers across the country, including homelessness prevention, housing assistance, and transportation infrastructure, that Congress has long recognized as essential through its appropriations. Plaintiffs assert that these new funding conditions are unconstitutional, exceed statutory authority, and violate the Administrative Procedure Act.

Currently before the Court are Plaintiffs’ First and Second Motions for Preliminary

Injunction, both of which Defendants oppose. Having reviewed the briefs and exhibits filed in support of and in opposition to the motions, the record of the case, and the relevant legal authority, and having heard the argument of counsel, the Court will grant the motions. The reasoning for the Court’s decision follows.

II. PROCEDURAL HISTORY

This lawsuit began on May 2, 2025, when eight cities and counties across the United

States sued HUD, DOT, FTA, and their respective administrators, challenging their imposition of new funding conditions on grants the cities and counties had been conditionally awarded for fiscal year 2024. Dkt. No. 1 (“Compl.”).2 Three days later, on May 5, 2025, seven of the cities and counties filed a motion for a temporary restraining order (“TRO”) in which they sought to enjoin

HUD, DOT, and FTA from imposing the new funding conditions on the grants.3 Dkt. No. 5

(“TRO Mot.”). After briefing and a hearing on May 7, 2025, this Court granted the motion and temporarily enjoined HUD, DOT, and FTA from: (1) imposing or enforcing the new funding conditions on the grants, (2) rescinding or cancelling the grant agreements (or otherwise impeding acting Director of FHWA, FAA, Chris Rocheleau as acting Administrator of FAA, FRA, and Drew Feeley as acting Administrator of FRA (collectively “Defendants”).

2 The original eight plaintiffs were: King County, Pierce County, Snohomish County, San Francisco, Santa Clara, Boston, Columbus, and NYC. Dkt. No. 1.

3 Columbus did not join the motion.

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- 4 or withholding the funds) based on the new funding conditions, and (3) requiring Plaintiffs to make certifications or other representations related to compliance with the new funding conditions. Dkt. No. 52 (“TRO Order”).

At the conclusion of the hearing on the TRO motion, the seven cities and counties stated their intent to move for a preliminary injunction on the same issues subject to the TRO, which was set to expire fourteen days later. Dkt. No. 53. This Court ordered briefing and on May 21, 2025, held a hearing on the motion for a preliminary injunction. Id.; Dkt. No. 73. At the conclusion of that hearing, the Court determined that good cause existed to extend the TRO by another fourteen days, to June 4, 2025, and indicated that it would issue a written decision on the motion for preliminary injunction by that date. Dkt. No. 73. Thereafter, also on May 21, 2025, Plaintiffs filed an amended complaint adding twenty-one cities, counties, and local housing and transit agencies as plaintiffs, as well as FHWA, FAA, FRA, and their respective administrators, as defendants. Dkt. No. 71 (“Amend. Compl.”). Plaintiffs Cambridge, KCRHA, Nashville, Pasadena, Pima County, San Jose, Santa Monica HA, and Tucson join in the original plaintiffs’ challenge to the imposition of the new funding conditions on HUD grants that they were conditionally awarded for fiscal year 2024. Dkt. No. 72, Ex. 2, n. 1. Plaintiffs Bend, Boston, Chicago, Columbus, Culver City, Denver, Intercity, Minneapolis, Nashville, NYC, Pierce County, Pima County, Pittsburgh, Port of Seattle, Portland, San Francisco, San Jose, Santa Clara, Santa

Monica, Snohomish County, Sonoma County, CPSRTA, SFCTA, TIMMA, Tucson, and

Wilsonville join in the original plaintiffs’ challenge to the imposition of the new funding conditions on DOT grants that they were conditionally awarded for fiscal year 2024. Id.

The Amended Complaint was accompanied by Plaintiffs’ Second Motion for a Temporary

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Restraining Order and Preliminary Injunction. Dkt. No. 72 (“Pls. Sec. Mot.”). In this motion, Plaintiffs Columbus, Intercity, Minneapolis, NYC, Port of Seattle, and Tucson sought a TRO against DOT enjoining it from imposing the new funding conditions on their conditionally awarded grants. Pls. Sec. Mot, Ex. 1, n. 1. And Plaintiffs Cambridge and Pasadena sought a TRO against HUD enjoining it from imposing the new funding conditions on their conditionally awarded grants. Id. Defendants acknowledged that they “oppose the New Plaintiffs’ TRO and preliminary injunction motion for the same reasons they opposed the first.” Dkt. No. 151 (“Defs.

Opp. to Pls. Sec. Mot.”) at 4. After reviewing the second motion for a TRO and Defendants’ opposition thereto, this Court determined that the motion raised questions of law and fact that are materially identical to those raised in the first motion for a TRO, and granted the second TRO on the same terms as the first TRO. See Dkt. No. 152 (“Sec. TRO Order”) at 2–4.

Now before the Court are Plaintiffs’ first and second motions for a preliminary injunction, in which collectively all Plaintiffs join.

III. FACTUAL BACKGROUND

A. Overview of Federal Grants

As stated above, this lawsuit concerns the allocation of grants from two federal agencies:

HUD and DOT, and several DOT operating administrations: FTA, FHWA, FAA, and FRA.4

Plaintiffs allege that in January 2025, they were each awarded grants from these agencies for the fiscal year 2024, but beginning in March and April 2025, Defendants began to impose new funding conditions on the grants. Plaintiffs claim that these conditions exceed Congressional

4 Congress and DOT refer to DOT divisions—including FTA, FHWA, FAA, and FRA—as “operating administrations.” 49 U.S.C. § 102; 49 C.F.R. § 1.2.

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- 6 authorization and violate the United States Constitution and the Administrative Procedure Act.

With this lawsuit, Plaintiffs seek a declaration that the new funding conditions are unlawful and an injunction enjoining Defendants from imposing the conditions, or substantially similar conditions, on the grants, and/or from withholding the grants based on those conditions. To that end, it is helpful to have a basic understanding of the federal grant process.

Each year, Congress exercises its constitutional authority to appropriate taxpayer resources to federal agencies through annual appropriation bills. These bills specify the amount of money allocated to each agency, and for what purposes, for that fiscal year.5 While the process for awarding grant funds varies by program, generally the federal agencies issue notices of funding opportunity (“NOFO”) that announce the availability of funding, outline the requirements for the grant programs, and reflect the specific goals and priorities of the funding programs.6 State and local governments, nonprofits, and other entities apply to receive grant funds and the agencies review the applications to assess the eligibility both of the applicant and the proposed use of the funds to ensure the proposed project is in compliance with the program’s statutory and regulatory requirements.7 The agencies then issue notices of award to those applicants whose proposals are approved and conditionally funded.8 Once the grant recipient successfully meets the requirements for the grant, a grant or cooperative agreement is issued, and the funds are released. The grant or

5 The Appropriations Committee: Authority, Process, and Impact, Appropriations Chairman Tom Cole, https://appropriations.house.gov/about/appropriations-committee-authority-process-and-impact (last visited May 9, 2025).

6 The Grant Lifecycle, Grants.gov, https://www.grants.gov/learn-grants/grants-101/the-grant-lifecycle (last visited May 9, 2025).

7 Natalie Paris, Understanding Federal Agency Grant Disbursement, Payment Processes, and “Freezes”, Congressional Research Service (Feb. 21, 2025), https://www.congress.gov/crs-product/IF12924.

8 Award Phase, Grants.gov, https://www.grants.gov/learn-grants/grants-101/award-phase.html#NOA (last visited May 9, 2025).

Case 2:25-cv-00814-BJR Document 169 Filed 06/03/25 Page 6 of 49 https://appropriations.house.gov/about/appropriations-committee-authority-process-and-impact https://www.grants.gov/learn-grants/grants-101/the-grant-lifecycle https://www.congress.gov/crs-product/IF12924 https://www.grants.gov/learn-grants/grants-101/award-phase.html#NOA

- 7 cooperative agreement sets forth the terms and conditions attached to the award, which generally include the amount of funding approved, a description and scope of the project, an approved budget, and financial and performance reporting requirements.9 If the grant recipient signs the agreement or withdraws grant funds, it becomes legally obligated to carry out the terms and conditions of the agreement.10

B. The HUD Grants

Congress enacted the McKinney-Vento Homeless Assistance Act (the “Homeless

Assistance Act”) to “meet the critically urgent needs of the homeless of the Nation” by providing

“funds for programs to assist the homeless, with special emphasis on elderly persons, handicapped persons, families with children, Native Americans, and veterans.” 42 U.S.C. §

11301(b)(2)–(3). Through the Act, Congress provides federal funding for a number of programs, including the Continuum of Care Program (“CoC Program”). The CoC Program is designed “to assist individuals (including unaccompanied youth) and families experiencing homelessness” by providing services “to help such individuals move into transitional and permanent housing, with the goal of long-term stability.”11 It does this by providing funding to states, local governments, Indian Tribes, and nonprofit entities for a variety of programs, including shelters and supportive housing, rental assistance, childcare, job training, healthcare, mental health services, and life skills training. Id. §§ 11360(29), 11381, 11383.

9 Paris, supra note 7.

10 Award Phase, supra note 8.

11 Continuum of Care (CoC) Program Eligibility Requirements, HUD Exchange, https://www.hudexchange.info/programs/coc/coc-program-eligibility-requirements/ (last visited May 9, 2025).

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HUD is the federal agency responsible for administering the CoC Program. Most recently, Congress appropriated funds for the CoC Program in the 2024 Consolidated

Appropriations Act (“the Appropriations Act”) and in January 2024, HUD posted a NOFO announcing CoC funding for fiscal years 2024 and 2025.12 Plaintiffs King County, Pierce

County, Snohomish County, San Francisco, Santa Clara, Boston, Columbus, NYC, Nashville, Pima County, Cambridge, Pasadena, San Jose, Tucson, King County RHA, and Santa Monica

HA (collectively, “the CoC Plaintiffs”) each timely submitted applications in response to the

NOFO and on January 17, 2025, HUD conditionally awarded the CoC Plaintiffs hundreds of millions of dollars in CoC grants for fiscal year 2024. Relying on these awards, CoC Plaintiffs have already committed, and in some cases expended, millions of dollars for homeless assistance services.

C. The DOT Grants

Congress established DOT in 1966 “to assure the coordinated, effective administration of the transportation programs of the Federal Government” and has established by statute a wide variety of grant programs that provide federal funds to state and local governments for public transit services. Department of Transportation Act, Pub. L. No. 89-670, 80 Stat. 931 (1966). In administering these grant programs, DOT often acts through its operating administrations, including the FTA, FHWA, FAA, and FRA.

12 FY 2024 and FY 2025 Continuum of Care Competition and renewal or Replacement of Youth Homeless Demonstration Program Grants FR-6800N-2025, U.S. Department of Housing and Urban Development (August 29, 2025), FY 2024 and FY 2025 Continuum of Care Competition and Renewal or Replacement of Youth Homeless Demonstration Program Grants.

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1. The FTA Grant Programs

FTA provides financial and technical assistance to local public transit systems nationwide.13 Since at least 2021, Congress has annually appropriated funding for grants administered by FTA, including grants for: (1) the operation of public transit facilities and equipment in urban areas, (2) public transit systems that operate on fixed rights-of-way such as rail or passenger ferries, (3) replacement of rail rolling stock, and (4) the purchase and maintenance of buses and bus facilities. 49 U.S.C. §§5302(8), 5307(a)(1), 5337(b), 5339(a)(2), (b), (c). Plaintiffs King County, San Francisco, Boston, NYC, Pima County, Denver, Chicago, Culver City, Portland, Santa Monica, Tucson, Wilsonville, Intercity Transit, and Sound Transit operate public transit or are otherwise eligible for FTA grants and “currently rely on billions of dollars in appropriated federal funds from FTA grant programs for transit services and improvements provided or undertaken for the benefit of their residents.” Amend. Compl. ¶ 91.

2. FHWA Grant Programs

FHWA supports state and local governments in the design, construction, and maintenance of the nation’s highway system through financial and technical assistance.14 To that end, FHWA administers programs such as Safe Streets and Roads for All, the Federal Highway-Aid Program, the Bridge Investment Program, and the National Culvert Removal, Replacement, and Restoration

Grant Program. Congress annually appropriates funds to the foregoing programs, including through the Infrastructure Investment and Jobs Act of 2021 (“the Infrastructure and Jobs Act”).

13 About FTA, Federal Transit Administration, https://www.transit.dot.gov/about-fta (last visited May 9, 2025).

14 About FHWA, U.S. Department of Transportation Federal Highway Administration, https://highways.dot.gov/about/about-fhwa#:~:text=Who%20We%20Are,technologically%20sound%20in%20the%20world (last visited May 29, 2025).

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Plaintiffs King County, Pierce County, San Francisco, Santa Clara, Snohomish County, Boston, Columbus, NYC, Denver, Nashville, Pima County, Chicago, Minneapolis, Portland, Pittsburgh, San Jose, Santa Monica, Sound Transit, Tucson, SFCTA, and TIMMA receive and rely on

FHWA grants worth hundreds of millions of dollars in appropriated funds.

3. FAA Grant Programs

The FAA’s primary purpose is to regulate civil aviation and to maintain and operate air traffic control and navigation systems.15 Congress has established by statute a variety of grant programs administered by DOT, acting through the FAA, that provide federal funds to public agencies for planning and development of airports. These programs include the Airport

Improvement Program and the Airport Infrastructure Grants Program, which are funded by

Congress through statutes such as the Infrastructure and Jobs Act, the FAA Reauthorization Acts of 2018 and 2024, and most recently, the Consolidated Appropriations Act of 2024. Plaintiffs

King County, Pierce County, Snohomish County, San Francisco, Denver, Pima County, Sonoma

County, Bend, Chicago, San Jose, and Port of Seattle currently have hundreds of millions of dollars in appropriated federal funds from FAA grant programs for airport development and infrastructure projects.

4. FRA Grant Programs

The mission of FRA is to enable the safe, reliable, and efficient movement of people and goods via railways across the United States.16 FRA provides federal funds to public agencies for

15 Federal Aviation Administration, Federal Register, https://www.federalregister.gov/agencies/federal-aviation-administration#:~:text=The%20mission%20of%20the%20FAA,and%20the%20National%20Airspace%20System (last visited May 29, 2025).

16 FRA 101: Getting to Know FRA, U.S. Department of Transportation Federal Railroad Administration (Aug.

2021), https://railroads.dot.gov/sites/fra.dot.gov/files/2021-12/20210824-FRA101.pdf.

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- 11 rail infrastructure projects such as the Railroad Crossing Elimination Grant Program that provides funds to improve the safety and mobility of people and goods at railway crossings. Funding for the program was provided through the Infrastructure and Jobs Act. Plaintiffs allege that Bend, Minneapolis, Portland, Sound Transit, and San Jose currently have millions of dollars in appropriated federal funds from FRA grant programs for rail infrastructure projects.

5. The DOT SMART Grant Program

The Strengthening Mobility and Revolutionizing Transportation (“SMART”) grant program was established by Congress through the Infrastructure and Jobs Act to provide grants

“to eligible public sector agencies for projects focused on advanced smart community technologies and systems in order to improve transportation efficiency and safety.” Id. ¶ 116. It is administered by DOT. Plaintiffs allege that Boston, Chicago, Minneapolis, Nashville, and

Intercity Transit are slated to receive millions of dollars in appropriated funds for the SMART grant program.

D. New Funding Conditions in the HUD and DOT Grant Agreements

Plaintiffs claim that HUD and DOT are imposing unlawful funding conditions on the

CoC and DOT grants—conditions that were not included in the relevant NOFOs or authorized by statute or regulation. Rather, Plaintiffs argue, the new funding conditions seek “to coerce grant recipients that rely on federal funds into implementing President Trump’s policy agenda, and direct them to adopt his legal positions, contrary to settled law. Amend. Compl. ¶ 4. Plaintiffs challenge Defendants’ imposition of new funding conditions on the grants, arguing that the conditions are unconstitutional, violate the Administrative Procedure Act, and exceed statutory

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- 12 authority. It is understood that without acceptance of these conditions, the grants will not be funded.

1. The New HUD Funding Conditions

Plaintiffs allege that beginning in March and April 2025, HUD presented the CoC

Plaintiffs with grant agreements (collectively, “the CoC Grant Agreements”) that contained new funding conditions that were not included in the relevant NOFO, and not authorized by the

Homeless Assistance Act, the Appropriations Act, or HUD regulations. Specifically, Plaintiffs object to the following six conditions in the CoC Grant Agreements:

A. The recipient “shall not use grant funds to promote ‘gender ideology,’ as defined in E.O. 14168 Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government”;

B. The recipient “agrees that its compliance in all respects with all applicable Federal anti-discrimination laws is material to the U.S. Government’s payment decisions for purposes of [the False Claims Act, 31 U.S.C. § 3729(b)(4)]”;

C. The recipient “certifies that it does not operate any programs that violate any applicable Federal anti-discrimination laws, including Title VI of the Civil Rights Act of 1964”;

D. The recipient “shall not use any Grant Funds to fund or promote elective abortions, as required by E.O. 14182, Enforcing the Hyde Amendment”;

E. “No state or unit of general local government that receives funding under this grant may use that funding in a manner that by design or effect facilitates the subsidization or promotion of illegal immigration or abets policies that seek to shield illegal aliens from deportation”; and

F. “Subject to the exceptions provided by [the Personal Responsibility and Work

Opportunity Reconciliation Act of 1996 (“PRWORA”)], the recipient must use SAVE, or an equivalent verification system approved by the Federal government, to prevent any Federal public benefit from being provided to an ineligible alien who entered the United States illegally or is otherwise unlawfully present in the United States.”

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Dkt. No. 11 (“McSpadden Decl.”), Ex. A at 3. In addition, the CoC Grant Agreements also state that the Agreements, the recipients’ use of funds provided under the Agreements, and the recipients’ operation of projects with grant funds are “governed by” “all current Executive

Orders.” Id. at 1, ¶ 5.

2. The New DOT Funding Conditions

Plaintiffs claim that DOT and its operating administrations have also attached unlawful funding conditions to the DOT grants by amending the grants’ general terms and agreements, master grant agreements, and/or assurance requirements. For instance, Plaintiffs allege that DOT inserted the following funding conditions in the FTA Master Agreement that governs all FTA grants:

A. “Pursuant to section (3)(b)(iv)(A), Executive Order 14173, Ending Illegal Discrimination and Restoring Merit-Based Opportunity, the Recipient agrees that its compliance in all respects with all applicable Federal anti-discrimination laws is material to the government’s payment decisions for purposes of [the False Claims Act, 31 U.S.C. § 3729(b)(4)]”;

B. “Pursuant to section (3)(b)(iv)(B), Executive Order 14173, Ending Illegal

Discrimination and Restoring Merit-Based Opportunity, by entering into this Agreement, Recipient certifies that it does not operate any programs promoting diversity, equity, and inclusion (DEI) initiatives that violate any applicable Federal anti-discrimination laws”; and

C. “[T]he Recipient will cooperate with Federal officials in the enforcement of

Federal law, including cooperating with and not impeding U.S. Immigration and Customs Enforcement (ICE) and other Federal offices and components of the Department of Homeland Security in the enforcement of Federal immigration law.”

Amend. Compl.¶¶ 164, 172. In addition, the April 25, 2025 FTA Master Agreement requires that the recipient comply with all applicable federal laws, regulations, and requirements and defines

“federal requirements” to include “executive order.” Id. ¶¶ 168, 170. Plaintiffs allege that the

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- 14 foregoing new funding conditions are included in materially identical form in the FHWA, FAA, and FRA grant requirements, as well as the DOT SMART grant program. They charge that the new funding conditions were not included in the relevant NOFOs, were not authorized by the relevant statutes, and are inconsistent with the relevant regulations.

E. Plaintiffs Allege Irreparable Harm

Plaintiffs allege that “[t]he grant conditions that Defendants seek to impose leave [them] with the Hobson’s choice of accepting illegal conditions that are without authority [and] contrary to the Constitution . . . or forgoing the benefit of grant funds . . . that are necessary for crucial local services.” Id. ¶ 235. Plaintiffs claim that loss of the CoC Program grants would result in a loss of hundreds of millions of dollars in funding for housing and other services meant to meet the basic needs of the CoC Plaintiffs’ homeless residents, including access to housing, healthcare, and counseling, which would have a devasting impact on their residents and communities. Likewise, Plaintiffs allege that the DOT grants represent billions of dollars in funding for critical services and projects for the DOT Plaintiffs’ residents, including transit improvement and safety initiatives, critical railway and airport infrastructure, transportation modernization, and improved air quality. Plaintiffs assert that the loss of these projects would irreparably harm DOT Plaintiffs’ residents and communities.

IV. DISCUSSION

A. The APA Sovereign Immunity Waiver Applies to Plaintiffs’ Claims and this

Court Has Jurisdiction pursuant to 28 U.S.C. § 1331

“[A plaintiff] may sue the United States only if Congress has waived sovereign immunity for the lawsuit, and may bring its claim in federal district court only if Congress has provided for jurisdiction there.” North Star Alaska v. United States, 9 F.3d 1430, 1432 (9th Cir. 1993) (en

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- 15 banc) (per curiam). Thus, as a threshold matter, this Court must determine whether Congress has waived sovereign immunity for Plaintiffs’ claims and whether this Court has subject-matter jurisdiction to address them. For the reasons set forth below, this Court concludes that the answer to both questions is yes.

1. The Sovereign Immunity Waiver under the APA

It is a bedrock principal of our legal system that the federal government—including its federal agencies—has sovereign immunity and may not be sued absent a clear and express waiver by statute. See United Aeronautical Corporation v. United States Air Force, 80 F.4th

1017, 1022 (9th Cir. 2023); see also United States v. Mitchell, 463 U.S. 206, 212 (1983) (“It is axiomatic that the United States may not be sued without its consent and that existence of such consent is a prerequisite for jurisdiction.”). The Administrative Procedure Act (“APA”), 5 U.S.C.

§ 551 et seq., is one example of such waiver—the statute expressly waives federal sovereign immunity so that a plaintiff “adversely affected” by a “final agency action” may obtain “judicial review thereof.” Id. § 702; see also Cmty Legal Servs. in E. Palo Alto v. U.S. Dep’t of Heath &

Hum. Servs., No. 25-2802, 2025 WL 1393876, at *2 (9th Cir. May 14, 2025) (quoting Abbott

Lab’ys v. Gardner, 387 U.S. 136, 140–41 (1967) (The APA “embodies [a] basic presumption of judicial review to one ‘suffering legal wrong because of agency action.’”)).

However, the APA’s sovereign immunity waiver is not without limits. Relevant to this motion are two such limitations. First, the waiver does not apply if the relief sought by the plaintiff is expressly or impliedly forbidden by another statute. Tucson Airport Auth. v. Gen.

Dynamics Corp., 136 F.3d 641, 645 (9th Cir. 1998); see also Cmty Legal Servs. in E. Palo Alto, 2025 WL 1393876, at *2 (“The APA generally waives sovereign immunity and permits a

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- 16 challenge to agency action unless ‘any other statute that grants consent to suit expressly or impliedly forbids the relief which is sought.’”) (quoting 5 U.S.C. § 702). Second, the waiver does not apply if an agency action is “committed to agency discretion by law.” Jajati v. U.S.

Customs & Border Prot., 102 F.4th 1011, 1014 (9th Cir. 2024) (quoting 5 U.S.C. § 701(a)(2)).

In addition, the APA is not a jurisdiction-conferring statute in that it does not directly grant subject matter jurisdiction to the federal courts. See Califano v. Sanders, 430 U.S. 99, 105

(1977). Instead, federal courts exercise jurisdiction over APA claims pursuant to 28 U.S.C. §

1331, which grants courts jurisdiction to hear cases arising under federal law. See South Delta

Water Agency v. United States, 767 F.2d 531, 539 (9th Cir. 1985) (“[T]he Supreme Court has interpreted section 1331 as conferring jurisdiction on federal courts to review agency action

‘subject only to preclusion-of-review statutes created or retained by Congress. . . .’”) (quoting

Califano, 430 U.S. at 105)).

2. The Parties’ Jurisdictional Arguments

According to Plaintiffs, their claims fall squarely within the APA’s sovereign immunity waiver because they seek injunctive and declaratory relief against HUD and DOT actions that have adversely affected them, and that this Court has jurisdiction under 28 U.S.C. § 1331.

Defendants counter that Plaintiffs’ claims fall outside the APA’s waiver and this Court’s jurisdiction for two reasons. First, they argue that the relief Plaintiffs request is impliedly forbidden by the Tucker Act, 28 U.S.C. § 1491, which grants the Court of Federal Claims exclusive jurisdiction over contract claims against the federal government. § 1491(a). Second, Defendants contend that HUD’s and DOT’s decision to impose the new funding conditions on

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- 17 the grants is not subject to this Court’s review because the action is “committed to agency discretion by law.” 5 U.S.C. § 701(a)(2).

3. The Tucker Act Does Not Impliedly Forbid the Relief Sought by Plaintiffs

Defendants argue that Plaintiffs’ claims, while pled under the APA, are actually breach-of-contract claims against the United States and, therefore, must be brought in the Court of

Federal Claims. In other words, Defendants’ jurisdictional argument hinges on their successfully recharacterizing Plaintiffs’ allegations as contract claims rather than APA challenges to agency action. See Cmty Legal Servs. in E. Palo Alto, 2025 WL 1393876, at *2 (“[T]he Tucker

Act . . . ‘impliedly forbid[s]’ an APA action seeking injunctive and declaratory relief only if that action is a ‘disguised’ breach-of-contract claim.”) (quoting United Aeronautical Corp., 80 F.4th at 1026).

a. Plaintiffs’ APA Claims Are Not “Disguised” Breach-of- Contract Claims

To resolve whether Plaintiffs’ APA claims are “disguised” breach-of-contract claims that must be brought in the Court of Federal Claims, this Court must determine: (1) “the source of the rights” upon which Plaintiffs base their claims, and (2) “the type of relief” Plaintiffs seek. United

Aeronautical Corp., 80 F.4th at 1026 (quoting Megapulse, Inc. v. Lewis, 672 F.2d 959, 967 (D.C.

Cir. 1982) (“The classification of a particular action as one which is or is not ‘at its essence’ a contract action depends on both the source of the rights upon which plaintiff bases its claims, and upon the type of relief sought (or appropriate).”). “If the rights and remedies are statutorily or constitutionally based,” this Court has jurisdiction; “if the rights and remedies are contractually based,” the Court of Federal Claims has jurisdiction. Id. (emphasis in original).

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- 18

(i) The Source of Rights on which Plaintiffs’ Base Their Claims

In examining the source of the rights upon which a plaintiff bases its claims, courts consider, among other things: (1) whether the “asserted rights and the government’s purported authority arise from statute,” (2) whether the “rights exist . . . apart from rights created under [a] contract,” and (3) whether the plaintiff seeks to enforce a duty on the government that was created by a contract “to which the government is a party. Crowley Gov’t Servs., Inc. v. Gen.

Servs. Admin., 38 F.4th 1099, 1107 (D.C. Cir. 2022). Courts have explicitly rejected the notion

“that any case requiring some reference to . . . a contract is necessarily on the contract and therefore directly within the Tucker Act” because to do so would “deny a court jurisdiction to consider a claim that is validly based on grounds other than a contractual relationship with the government.” Id. (quoting Megapulse, 672 F.2d at 967–68) (recognizing that “[c]ontract issues may arise in various types of cases where the action itself is not founded on a contract”). “[T]he mere fact that a court may have to rule on a contract issue does not, by triggering some mystical metamorphosis, automatically transform an action . . . into one on the contract and deprive the court of jurisdiction it might otherwise have.” Megapulse, 672 F.2d at 968; see also Transohio

Sav. Bank v. Director, Office of Thrift Supervision, 967 F.2d 598, 609 (D.C. Cir. 1992), rev’d on other grounds, Perry Capital LLC v. Mnuchin, 864 F.3d 591 (D.C. Cir. 2017) (“The answer . . . depends not simply on whether a case involves contract issues, but on whether, despite the presence of a contract, plaintiffs’ claims are founded only on a contract, or whether they stem from a statute or the Constitution.”).

Defendants argue that the purpose of Plaintiffs’ lawsuit is to force the government to release the CoC and DOT grant funds to them, and the sources of Plaintiffs’ rights to those funds

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- 19 are the CoC and DOT Grant Agreements. According to Defendants, “[t]hat means the source of

Plaintiffs’ rights are [sic] contractual, and this Court lacks subject-matter jurisdiction.” Dkt. No.

55 (“Defs.’ Opp.”) at 15. Defendants misconstrue the nature of Plaintiffs’ lawsuit. Contrary to what Defendants argue, Plaintiffs are not seeking an order from this Court directing payment of the grant funds to them. Instead, the relief Plaintiffs seek is an order from this Court declaring that the new funding conditions are unlawful and enjoining Defendants from imposing them in the Grant Agreements. Specifically, Plaintiffs seek: (1) a declaration that the new funding conditions Defendants imposed in the Grant Agreements “are unconstitutional, are not authorized by statute, violate the APA, and are otherwise unlawful” and (2) an injunction

“enjoining [Defendants] from “imposing or enforcing [the new funding conditions] or any materially similar terms or conditions to any [CoC or DOT] funds received by or awarded to, directly or indirectly, [Plaintiffs].” Amend Compl. at VI. A–D. Plaintiffs contend that the funding conditions are unlawful because they are not included in the relevant NOFOs, are unauthorized by the statutes that created the relevant programs, are inconsistent with the appropriations statutes that fund the programs, and do not comply with the regulations that HUD and DOT promulgated to implement the programs. See generally Amend. Compl. Resolution of

Plaintiffs’ claims will require this Court to conduct an in-depth analysis of the foregoing statutes and regulations to determine whether Defendants acted reasonably and in compliance with

Plaintiffs’ statutory and constitutional rights; resolution of Plaintiffs’ claims will not require an analysis of the respective Grant Agreements. Thus, the source of Plaintiffs’ rights resides in statutes and the Constitution, not in any contractual provisions in the Grant Agreements. See

Cmty Legal Servs. in E. Palo Alto, 2025 WL 1393876, at *2 (“[P]laintiffs seek to enforce

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- 20 compliance with statutes and regulations, not any government contract. . . . Seeking to ensure compliance with statutory and regulatory commands is a matter beyond the scope of the Tucker

Act’s exclusive jurisdiction.”); Widakuswara v. Lake, No. 25-5144, 2025 WL 1288817, at *10

(D.C. Cir. May 3, 2025) (Pillard dissenting) (“What matters is what the court must examine to resolve the case: If a plaintiff’s claim depends on interpretation of statutes and regulations rather than the terms of an agreement negotiated by the parties, the claim is not in essence contractual.”); Crowley, 38 F.4th at 1109–10 (claim was statutory, not contractual, when it

“require[d] primarily an examination of statutes”); Climate United Fund v. Citibank, N.A., No.

25-cv-698, 2025 WL 842360, at *6 (D.D.C. March 18, 2025) (“Plaintiffs do not challenge a contract between the parties—they challenge an action . . . Plaintiffs’ ‘claims arise under a federal grant program and turn on the interpretation of statutes and regulations rather than on the interpretation of an agreement negotiated by the parties.’”) (quoting Md. Dep’t of Hum. Res. v.

Dep’t of Health & Hum. Servs., 763 F.2d 1441, 1449 (D.C. Cir. 1985)).

(ii) The Type of Relief Sought by Plaintiffs

Next, this Court must consider the nature of the relief sought by Plaintiffs in this lawsuit.

United Aeronautical Corp., 80 F.4th at 1026. If the relief sought is “akin to the traditional remedies available for breach of contract (damages or specific performance)”, the Tucker Act applies, and Plaintiffs’ claims belong in the Court of Federal Claims. Id.; Crowley, 398 F.4th at

1107 (“The crux of this inquiry . . . boils down to whether the plaintiff effectively seeks to attain money damages in the suit.”). If, however, the relief sought is not for money damages, then

Plaintiffs’ claims do not belong in the Court of Federal Claims, which is a specialized forum to resolve “actions based on government contracts,” Megapulse, 672 F.2d at 967, for “naked money

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- 21 judgment[s] against the United States.” Bowen v. Massachusetts, 487 U.S. 879, 905 (1988). As discussed above, Plaintiffs seek injunctive and declaratory relief only, they do not seek money damages based on a breach of contract claim. Indeed, the Amended Complaint expressly seeks no monetary relief. This, alone, is sufficient to render the Tucker Act inapplicable. See Bowen, 487 U.S. at 893 (“[I]nsofar as the complaints sought declaratory and injunctive relief, they were certainly not actions for money damages.”).

Nevertheless, Defendants argue that if this Court grants the equitable relief Plaintiffs request, it will ultimately result in the federal government having to disburse the grant funds, so

Plaintiffs’ request is really one for money damages. Defendants’ argument is foreclosed by

Bowen, 487 U.S. at 893. In Bowen v. Massachusetts, the Supreme Court was asked to address the scope of the APA’s sovereign immunity waiver where the Commonwealth of Massachusetts challenged a final order of the Secretary of Health and Human Services (“the Secretary”) refusing to reimburse Massachusetts through the Medicaid program for services related to care for the mentally disabled. Id. at 882. Massachusetts filed a complaint in district court alleging jurisdiction pursuant to 28 U.S.C. § 1331 and waiver of sovereign immunity under the APA. Id.

The Secretary argued that Massachusetts could not bring its claim under the APA because it was seeking “money damages”—i.e., reimbursement for the Medicaid services—and, as such, the federal district court did not have jurisdiction.

The Supreme Court disagreed, concluding that the district court did have jurisdiction because the relief sought by Massachusetts did not constitute “money damages” within the meaning of the APA. Id. at 893. In reaching this decision, the Supreme Court noted that “[t]he fact that a judicial remedy may require one party to pay money to another is not a sufficient

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- 22 reason to characterize the relief as ‘money damages’”. Id. In other words, the Supreme Court held that even though the relief Massachusetts requested—reversal of the Secretary’s decision to deny reimbursement—would obligate the United States to pay Massachusetts, this did not mean that Massachusetts’ claim was for “‘money damages’ as that term is used in the law.” Id. at 883.

The Supreme Court distinguished between compensatory damages, which “‘are given to the plaintiff to substitute for a suffered loss’” and specific remedies, which “‘are not substitute remedies at all, but attempt to give the plaintiff the very thing to which he was entitled.” Id. at

895 (quoting Md. Dep’t of Hum. Res., 763 F.2d at 1446 (quoting D. Dobbs, Handbook on the

Law of Remedies 135 (1973)) (emphasis in original)). With this distinction in mind, the Supreme

Court concluded that Massachusetts’ action to enforce the requirement that the government

“‘shall pay’ certain amounts for appropriate Medicaid services, is not a suit seeking money in compensation for the damage sustained by the failure of the Federal Government to pay as mandated; rather, it is a suit seeking to enforce the statute mandate itself, which happens to be one for the payment of money.” Id. at 900 (emphasis in original). Thus, the Supreme Court determined that Massachusetts’ claim was one for specific relief, not money damages; as such, the district court had jurisdiction over the claim.17

The United States Court of Appeals for the Federal Circuit (“Federal Circuit”) faced a similar jurisdictional issue in Katz v. Cisneros, 16 F.3d 1204 (Fed Cir. 1994). The plaintiff in that case was a low-income housing developer who entered into a housing assistance payments

17 The Supreme Court also noted that the legislative history of the 1976 amendment to the APA (the amendment that added the sovereign immunity waiver) made it clear that Congress intended to authorize APA review of federal grant-in-aid programs, and this is “surely strong affirmative evidence” that Congress “did not regard judicial review of an agency’s disallowance decision as an action for damages.” Id. at 898.

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- 23 contract as part of the Section 8 Moderate Rehabilitation Program of the United States Housing

Act of 1937. The Section 8 Program is administered by HUD through Public Housing Agencies

(“PHAs”) with whom HUD contracts to carry out the program at the local level. The Katz plaintiff had entered into a contract with a local PHA to develop a low-income housing project for an agreed-upon amount of rent payable to the plaintiff. The agreed-upon rent was calculated in accordance with HUD regulations based on the plaintiff’s cost of acquiring, owning, managing, and maintaining the project. However, after the plaintiff completed the project, HUD determined that the contract rent rate was too high, ordered that the rent be lowered, and further ordered that the plaintiff return all overpayments. The plaintiff filed suit in federal district court, alleging claims for declaratory and injunctive relief, as well as breach of contract, among other claims, and asserting that the district court had jurisdiction under 28 U.S.C. § 1331 and the APA sovereign immunity waiver. HUD challenged the district court’s jurisdiction, arguing that the lawsuit was “contractual and that money damages [were] the appropriate relief.” Id. at 1207. The district court agreed with HUD and transferred the case to the Court of Federal Claims.

The plaintiff appealed and the Federal Circuit reversed and remanded the case back to the district court. In reaching its decision, the Federal Circuit held that “Bowen v.

Massachusetts . . . compels the conclusion that the relief sought by [the plaintiff] is not money damages, but a declaratory judgment and other equitable relief.” Id. at 1208. The Federal Circuit saw no distinction between the kind of relief sought by Massachusetts in Bowen and that sought by the plaintiff in the case before it:

Like Massachusetts, [plaintiff] seeks payments to which it alleges it is entitled pursuant to federal statute and regulations; it does not seek money as compensation for a loss suffered. It wants to compel HUD to perform the calculation of contract rents in accordance with [HUD regulations]. That a payment of money may flow

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- 24 from a decision that HUD erroneously interpreted or applied its regulation does not change the nature of the case.

Id.

The Federal Circuit reached the same conclusion in National Center for Mfg. Sciences v.

United States, 114 F.3d 196 (Fed. Cir. 1997) in which the National Center for Manufacturing

Sciences (“NCMS”) filed suit against the United States Air Force in federal district court seeking an order directing the Air Force to release funds appropriated by Congress pursuant to an agreement between NCMS and the Air Force. The district court had determined that NCMS’s claim was a contract claim against the government and ordered that the case be transferred to the

Court of Federal Claims. NCMS appealed the transfer and the Federal Circuit determined that the district court had jurisdiction, stating:

[t]he distinction drawn by the Supreme Court in Bowen v. Massachusetts and by this court in Katz v. Cisneros between “money damages” (as that term is used in 5 U.S.C. § 702) and other forms of monetary relief makes it clear that NCMS’s demand for the release of the remaining funds referred to in the Appropriations Act is not a demand for “money damages” within the meaning of the exception to the APA’s waiver of sovereign immunity. Like the grant-in-aid applicants referred to in Bowen v. Massachusetts, NCMS is seeking funds to which it claims it is entitled under a statute; it is not seeking money in compensation for losses that it has suffered or will suffer as a result of the withholding of those funds. Thus, the message of Bowen v. Massachusetts and Katz v. Cisneros, as applied to this case, is that sovereign immunity does not bar the district court from conducting APA review of the Air Force’s refusal to release funds appropriated under the Appropriations Act.

Id. at 200.

The message of Bowen, Katz, and NCMS is crystal clear—the term “money damages” for purposes of the APA’s sovereign immunity waiver refers to “a sum of money used as compensatory relief” that is “given to the plaintiff to substitute for a suffered loss.” Bowen, 487

U.S. at 895 (quoting Md. Dep’t of Hum. Res., 763 F.2d at 1446 (emphasis in original). This

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- 25 contrasts with “specific remedies,” which “are not substitute remedies at all, but attempt to give the plaintiff the very thing to which he is entitled.” Id.