Fifteen states and the District of Columbia filed a federal lawsuit on Monday against the U.S. Department of Housing and Urban Development (HUD), challenging recent agency guidance that threatens to strip states of fair housing enforcement funds if they maintain antidiscrimination protections that exceed federal mandates.
Spearheaded by attorneys general Rob Bonta of California and Kwame Raoul of Illinois, the complaint was filed in the U.S. District Court for the Northern District of California. Echoing concerns raised by advocacy groups, the 16 Democratic attorneys general argue that a September 2025 HUD directive unlawfully undermines state-level civil rights law and violates both the Administrative Procedure Act and the U.S. Constitution, including the Spending Clause.
HUD Secretary Scott Turner lashed out at the Democratic AGs in a social media post Monday.
“Leftist state attorneys general have run to a San Francisco courthouse in a desperate attempt to obstruct President Trump’s America First agenda through political lawfare. Their latest stunt will not succeed,” Turner wrote on X. “As Secretary, I will continue enforcing the Fair Housing Act as written and intended. That is to ensure equal rights under the law, not extra rights for politically favored groups.”
At the heart of the dispute is the Fair Housing Assistance Program (FHAP), a decades-old partnership where HUD funds state and local agencies to process and investigate housing discrimination complaints. The plaintiff states face losing a combined $10.7 million in FHAP funding, including approximately $3 million earmarked for California alone, according to the Los Angeles Times.
The federal Fair Housing Act of 1968 prohibits discrimination based on seven protected traits, including race, religion and disability. However, as Bonta noted in a published statement, the federal law was designed as a “floor — not a ceiling.”
Many states offer broader protections. California, for example, safeguards against housing discrimination based on source of income, veteran status, sexual orientation and gender identity. Under the new HUD guidance, state agencies face decertification and a loss of federal funding if they enforce these broader, state-level protections.
The HUD guidance prohibits states from pursuing disparate impact claims, which target housing policies that appear neutral on their face but result in discriminatory effects. This specific federal push to modify disparate impact liability has faced broad pushback, including opposition from major industry groups like the National Association of Realtors.
State leaders involved in the suit warn the federal changes will cripple their ability to police the housing market.
“These actions threaten to weaken America’s fair housing enforcement system and undermine states’ ability to ensure equal access to housing. If unchallenged, discrimination in housing is almost certain to increase.” Raoul said in a statement.
In another published statement, Arizona Attorney General Kris Mayes said the move could raise the cost of enforcing fair housing laws while creating deep confusion for the real estate industry over which laws are actually enforceable.
Joining Arizona, California, Illinois and the District of Columbia in the suit are the attorneys general of Colorado, Connecticut, Delaware, Hawaii, Maine, Maryland, Massachusetts, Michigan, New Jersey, Rhode Island, Vermont and Washington.
The lawsuit arrives against a backdrop of broader agency restructuring. The attorneys general allege in their complaint that HUD has recently reduced its enforcement workforce and fired whistleblowers who publicly raised concerns about the dismantling of fair housing protections.
HUD did not respond to a request for comment by time of publication.
