RHODE ISLAND — A federal judge in Rhode Island ruled that the Trump administration's effort to change the criteria for using tens of millions of dollars in funding to aid homeless people was unlawful. U.S. District Judge Mary McElroy ordered the Department of Housing and Urban Development to scrap the new funding policy.

McElroy said that the Notice of Funding Opportunity violated the Administrative Procedure Act, a law governing how federal agencies develop and issue regulations. McElroy was nominated by President Donald Trump.

In 2025, several nonprofits filed a lawsuit accusing HUD of changing the rules for receiving $75 million to build housing for homeless families and individuals. The plaintiffs accused HUD of issuing a new Notice of Funding Opportunity for the Continuum of Care Builds program to better align with the Trump administration's social policies.

According to court filings, the plaintiffs argued that the Trump administration aimed to upend policies in place for decades to satisfy political considerations, including whether jurisdictions support sanctuary protections, harm reduction practices, or inclusive policies for transgender people. The National Alliance to End Homelessness and the Women's Development Corporation argued that HUD lacked the authority to make the changes.

The organizations said in court filings that the new award process would irreparably injure qualified applicants for the funds and the communities they serve. According to court filings, HUD argued that the new funding criteria were intended to ensure the availability of funding to protect vulnerable individuals and families from the trauma of homelessness while promoting self-sufficiency. HUD argued in court filings that the NOFO conditions focusing on public safety, cooperation with law enforcement, and prohibitions on illegal drug use were sufficiently related to the funding goals of self-sufficiency and reduction of trauma.

"For more than three decades, the federal government has supported housing providers and communities through HUD's programs to help people experiencing homelessness move into stable housing," said Skye Perryman, president and CEO of Democracy Forward and co-counsel for the plaintiffs, in a statement. "We are pleased that the court has stopped the Trump-Vance administration from holding life-saving funding hostage to a political agenda."

Ann Oliva, CEO of the National Alliance to End Homelessness, said in a statement, "The ruling was a victory for people across this nation who have overcome homelessness and stabilized in HUD's permanent housing programs."