This case involves a dispute over the federal Continuum of Care (CoC) program, which provides housing assistance to homeless individuals and families. In November 2025, the Department of Housing and Urban Development (HUD) abruptly rescinded its existing funding guidelines and issued a new Notice of Funding Opportunity (NOFO) that drastically reduced funding for permanent housing projects and imposed new eligibility requirements, including substance-abuse treatment conditions. This sudden shift threatened to create immediate funding gaps for housing providers, potentially leaving thousands of vulnerable residents homeless during the winter. A coalition of states and local governments sued, arguing that HUD's actions violated the Administrative Procedure Act and the McKinney-Vento Homeless Assistance Act. The district court granted a preliminary injunction, blocking HUD from implementing the new rules and requiring the agency to maintain the previous funding status quo. HUD did not appeal the injunction itself but later moved to dissolve it after Congress passed the THUD appropriations act, which provided some funding renewals. When the district court denied that motion, HUD sought an emergency stay from the First Circuit to lift the injunction while the case proceeds.
The First Circuit applied the four-factor test for emergency stays established in Nken v. Holder. The court focused primarily on whether HUD made a strong showing that it was likely to succeed on the merits of its appeal. HUD argued that the THUD appropriations act eliminated the threat of irreparable harm and authorized it to issue a late 2025 NOFO. The court rejected this interpretation, noting that THUD did not amend the McKinney-Vento Act's three-month deadline for issuing NOFOs and that the existing 24-25 NOFO already covered fiscal year 2025. Furthermore, the court emphasized that the district court's injunction was based on multiple independent grounds, including HUD's departure from the 'Housing First' policy and failure to follow notice-and-comment procedures, issues that THUD did not resolve. Regarding irreparable harm, the court found that allowing HUD to implement the new rules would cause immediate and devastating consequences, such as the closure of housing programs and the loss of services for the homeless, which could not be undone even if HUD eventually won the case. The court concluded that the public interest strongly favored maintaining the status quo to ensure continuity of housing for vulnerable populations.
The district court's preliminary injunction remains in effect, meaning HUD must continue to administer the Continuum of Care program under the 2024-2025 funding guidelines rather than the new, restrictive rules it attempted to implement. This prevents immediate funding gaps and program closures for housing providers serving homeless individuals. The underlying litigation regarding the legality of HUD's new rules will continue, but the status quo is preserved pending a final judgment. The court's decision highlights that while Congress provided some funding renewals through THUD, it did not grant HUD the authority to bypass statutory deadlines or fundamentally alter the program's structure without following proper administrative procedures.