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Santa Clara County scored a victory Tuesday in its legal skirmish with the Trump Administration over federal grants when a federal appeals court affirmed a ruling that bars the White House from tying funding for housing and transportation to its broader agenda on immigration and abortion.
The case against the administration was brought forward in May 2025 by a coalition of eight cities and counties, including San Francisco, Santa Clara and King counties. Today, the legal challenge includes more than 70 plaintiffs, including San Jose and Oakland. The Palo Alto City Council also voted unanimously last September to support the suit, which is known as Martin Luther King, Jr. County v. Scott Turner.
The Aug. 25 verdict from the United States Court of Appeals for the Ninth Circuit affirmed last year’s ruling from a federal district court and concluded that the cities would face irreparable harm if the federal government were to withhold funds for transportation and housing programs, including the Continuum of Care programs that focus on homeless assistance. The county and its allies were protesting a number of conditions that HUD had attached to the grants, including verification of an individual grant recipient’s immigration status and assurances that the funds would not be used to promote “gender ideology” or “elective abortions.”
“These conditions cannot be sustained as merely ensuring compliance with existing law, as the government argues,” Circuit Judge M. Margaret McKeown wrote in the opinion. “The majority of the conditions far exceed the limited authority set out by Congress and superimpose onerous requirements well after the government already awarded grant funds.”
The county had argued in its challenge that the ideological conditions that HUD and the federal Department of Transportation were trying to impose on the grant recipients are unrelated to the funding. Santa Clara County Counsel Tony LePresti said in a statement that the ruling “confirms that the Trump Administration abused its authority in imposing ideological conditions on federal grants supporting critical local government homelessness, transportation, and infrastructure projects.”
“The federal government’s efforts to advance its anti-immigrant, anti-abortion, anti-transgender, and anti-DEI agenda met a critical roadblock today: a federal court’s thoughtful application of the law,” LePresti said in a statement. “The County is pleased with the Ninth Circuit’s decision and looks forward to continuing to press its other challenges to the Trump Administration’s unlawful efforts to condition grant funding with the benefits of today’s ruling.”
The case is one of several that the county has filed to contest White House policies. It had previously challenged the administration’s attempt to cut off funds for law enforcement agencies in cities that do not cooperate with federal immigration authorities. It is also currently suing the federal government over its attempt to open an ICE detainment facility in the southern end of the county, near Gilroy. Palo Alto has joined both lawsuits, siding with the county.
The Tuesday verdict largely upheld the preliminary injunction that was issued on June 3, 2025, by U.S. District Court Judge Barbara J. Rothstein and that the Trump administration appealed. The appeals court concluded that federal agencies cannot impose DEI-related grant conditions “across an entire recipient organization, including programs that receive no federal funding,” according to a statement from the county.
The county is also challenging similar conditions that the federal government tried to attach to grants from the Department of Health and Human Services. A district county had blocked those conditions through a preliminary injunction. County officials believe that the Tuesday decision “further supports the legal foundation for that injunction,” according to the statement.
“The Ninth Circuit’s opinion has significant implications for the County and its broader litigation challenging unlawful conditions on federal funding,” the county’s statement reads.
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