Key Takeaways:
- Ninth Circuit limited agency authority to impose grant conditions.
- Court rejected executive agency attempts to define FCA materiality through certifications.
- Decision found other policy-based grant conditions also exceeded executive agency authority, including compliance with federal anti-discrimination laws beyond federally funded programs.
On August 25, 2026, the Ninth Circuit issued a 2-1 decision in County of King v. Turner, which involved a challenge to the Trump Administration’s imposition of new conditions on local government recipients of earlier-awarded federal grants earmarked for local homelessness and transportation projects.
The decision will be of interest to federal contractors and grantees, particularly those encountering new requirements from federal agencies aimed at furthering current Administration policy goals.
Pointing to various Executive Orders, in early 2025 the Department of Housing and Urban Development (“HUD”) and the Department of Transportation (“DOT”) sought to impose new conditions on the grant recipients designed to further various policy initiatives, including: a requirement that the recipient “agree[]” that compliance with federal antidiscrimination laws “is material to the government’s payment decisions” for purposes of the False Claims Act (“FCA”) and certify that it does not operate any programs that violate any federal antidiscrimination laws; restrictions on the use of the grant funds to promote or fund “gender ideology,” “elective abortions,” or “illegal immigration”; and a requirement to use SAVE or an equivalent verification system of immigrant status.
The appellate court largely affirmed the district court’s injunction preventing HUD and DOT from requiring the local governments to certify compliance with newly-minted conditions in order to receive the grant funds. The Ninth Circuit held that these requirements exceeded the scope of the agencies’ authority over the grants.
The decision raises important questions about the Trump Administration’s ability to use certifications of materiality to pursue False Claims Act enforcement of its policy initiatives, such as the Civil Rights Fraud Initiative. It also casts doubt on the Executive Branch’s ability to utilize its funding authority to require adherence with policy goals unrelated to the relevant authorizing statute.
What Did the Ninth Circuit Hold Regarding FCA Materiality Certifications?
Among the conditions that were enjoined by the district court and upheld by the Ninth Circuit were certifications sought by HUD and DOT defining certain requirements as material under the False Claims Act. The challenged materiality certifications purported to require a grant recipient to
agree[] 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)].
The Ninth Circuit concluded that there was no statutory basis for the federal agencies to impose this condition. It reasoned that certifications regarding the FCA did not “flow naturally” from the unrelated statutory framework of federal antidiscrimination law. The appellate court also concluded that the proposed condition was inconsistent with the FCA. Because Congress already defined the term “material” in the statute, the appellate court opined that the FCA does not permit the Executive to “impose its own definition of what is ‘material.’”
Because the appellate court’s reasoning relies in substantial part on the FCA, its holding that federal agencies lack authority to require federal funds recipients to certify the materiality of designated requirements appears to be broadly applicable beyond certifications relating to antidiscrimination laws.
Can Federal Agencies Require Antidiscrimination Certifications?
The Ninth Circuit also upheld the lower court’s injunction insofar as HUD and DOT sought to require the grant recipients to broadly certify their compliance with federal antidiscrimination laws.
DOT, for instance, sought to require recipients to certify that they do not operate “any programs promoting diversity, equity, and inclusion (DEI) initiatives” that are unlawful. The court held that no statutory authority permitted the government to condition funds on behavior that occurred outside of federally funded programs.
The appellate court reversed the district court’s injunction, however, insofar as it prevented HUD and DOT from requiring the grantees to certify that their participation in federally funded programs adhered to federal antidiscrimination laws.
The court determined that the authorizing statute, Title VI of the Civil Rights Act of 1964, permitted the agencies to “effectuate” the statute’s mandate by conditioning federal funds on compliance with programs operated with such funds.
Which Other Grant Conditions Did the Court Strike Down?
The Ninth Circuit affirmed the lower court’s injunction regarding a slew of other policy-related conditions imposed by HUD. For example, the appellate court concluded that HUD lacked statutory authority to prohibit grant recipients from using the homelessness grant funds to promote “gender ideology,” “elective abortions,” or “illegal immigration.”
The court found nothing in the authorizing statute’s text permitting the imposition of these conditions, including the statute’s catchall requirement that fund recipients “comply with such other terms and conditions as the Secretary may establish to carry out this part in an effective and efficient manner.”
Similarly, the court rejected a condition that the grant recipients “use SAVE, or an equivalent verification system [of immigration status]” to prevent benefits from flowing to persons without the immigration status required to receive them. It reasoned that because Congress separately passed a statute permitting the Attorney General to pass regulations about immigration status verification, Congress could not have meant to allow a different agency to do so “under the guise of making a [grant] program more effective.”
What Does County of King v. Turner Mean for Federal Contractors and Grantees?
In County of King, the Ninth Circuit displayed a reluctance to allow the Executive Branch to use its funding authority to expand or displace Congress’ own policy objectives. Accordingly, the decision raises important questions about the scope of the Executive Branch’s ability to impose conditions upon federal funding recipients—whether through materiality certifications under the FCA or directly—that are “orthogonal” to the purpose of the funding statutes.
It also calls into question the Executive Branch’s recent practice of attempting to define “materiality” for FCA purposes in contracts or grants. Although the decision involves conditions imposed on existing grants, the appellate court’s reasoning would seem to apply equally to conditions in connection with new funding decisions that are unrelated to the purpose of the authorizing statutes. Funding recipients facing imposition of similar conditions in federal contracts or grants should consider the decision in evaluating such requirements.
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