Michigan Attorney General Dana Nessel has secured a federal appeals court ruling rejecting the Trump administration's attempt to impose restrictions on federal homeless assistance funding that would have left thousands across the country without permanent housing.
The ruling comes after Nessel and a multistate coalition sued the U.S. Department of Housing and Urban Development last November, challenging HUD's abrupt changes to its Continuum of Care program, the largest resource for federal homelessness assistance funding.
The changes would have dramatically reduced the amount of grant funds that could be spent on permanent housing, forcing communities to redirect money toward programs that impose sobriety and other conditions on recipients. Homelessness advocates warned such restrictions would push many people back into homelessness.
Court Ruling Upholds Michigan's Challenge
On April 1, the appeals court rejected HUD's request to temporarily allow the restrictions to go into effect, siding with Michigan and the other states in the coalition.
"While the federal government felt comfortable gambling with the lives of thousands of Americans by forcing them onto the street, I am relieved that the Court has once again upheld the rule of law," Nessel said in a statement. "I will continue to defend vulnerable Michiganders from heartless, unlawful conditions that weaponize federal funding and pull the rug out from under them."
The appeals court said Nessel and the coalition had provided ample evidence that if HUD moved ahead with its planned restrictions to the funding, the results would be "immediately destabilizing and disastrous for their constituents."
Michigan at Risk
Michigan received more than $100 million through the Continuum of Care grant program last year. The illegal terms listed in the 2025 notice of funding opportunity would have adversely impacted Michigan residents, putting an estimated 7,000 total households at risk of losing their housing, including approximately 2,000 families with children.
Nessel's legal team filed the lawsuit on behalf of Michigan along with other states, arguing that HUD's changes violated federal law by restricting how grant funds could be used. The U.S. District Court Judge Mary McElroy sided with the states in December, saying HUD's actions would cause irreparable harm to the plaintiffs. She issued a preliminary injunction barring HUD from implementing the unlawful restrictions.
Broader Federal Challenge
This is the latest in a series of legal battles between state attorneys general and the Trump administration over federal funding and regulations. Nessel has been particularly active in challenging federal overreach affecting Michigan residents.
The case highlights the tension between federal agencies attempting to reshape homelessness assistance and state officials working to maintain existing programs that have helped thousands of Michiganders find permanent housing.
Homelessness experts say the Continuum of Care program has been essential in helping communities provide stable, long-term housing solutions. The restrictions would have forced states to reduce funding for permanent housing while simultaneously imposing conditions that made it harder for people to qualify for assistance.
Nessel has indicated she will continue to pursue legal action against any attempt to reimpose these restrictions, vowing to defend Michigan's access to federal funding for vulnerable residents.