By Samantha Paul Eleven cities and counties in California and Oregon have won a significant preliminary ruling in a federal lawsuit challenging Trump administration conditions attached to public-safety and other federal grants. On July 9, 2026, U.S. District Judge William H. Orrick temporarily blocked the Department of Homeland Security, Department of Justice and Department of the Interior from enforcing several disputed conditions against the local governments. The judge concluded that the municipalities were likely to succeed in showing that the conditions exceeded executive authority and conflicted with Congress’s decisions about how the grant programs should operate.
What Is the California–Oregon DEI Grant Lawsuit About?
The case is City of Fresno et al. v. Mullin et al., Case No. 3:26-cv-01535-WHO, in the U.S. District Court for the Northern District of California.
The lawsuit was filed on February 20, 2026, by 11 California and Oregon local governments. The plaintiffs are Fresno, Santa Clara, Redwood City, Santa Cruz, Beaverton, Corvallis, Hillsboro and Stockton, along with San Diego County, Los Angeles County and Santa Barbara County.
They regularly seek federal money for programs involving law enforcement, disaster preparedness, victim assistance, emergency services and water conservation.
What Federal Grant Conditions Were Challenged?
The lawsuit challenges several conditions the administration attached to grants administered by DHS, FEMA, DOJ and DOI.
Among the disputed provisions are requirements connected with diversity, equity and inclusion, or DEI. Some terms require recipients to certify that they do not operate programs that promote DEI, DEIA or what the administration calls “discriminatory equity ideology” in violation of federal anti-discrimination laws.
Other challenged provisions involve immigration cooperation, compliance with presidential executive orders and policies concerning “gender ideology.”
The municipalities argued that the administration was effectively using federal grants authorized by Congress to force local governments to adopt unrelated federal policy positions.
Why Did the Cities and Counties Sue?
The plaintiffs said refusing the conditions could place important federal funding at risk, while accepting them could force local governments to change lawful programs and policies.
They brought constitutional claims involving separation of powers and the Spending Clause, along with claims under the Administrative Procedure Act. They also alleged violations involving due process and the Tenth Amendment.
A central argument is that Congress—not the president or individual agencies—controls federal spending. The plaintiffs contend that executive agencies cannot add broad new political conditions to congressionally created grant programs without authorization from Congress.
Judge William Orrick Blocks the Conditions
On July 9, Judge Orrick granted the municipalities’ request for a preliminary injunction.
The court found that the plaintiffs were likely to succeed on important portions of their constitutional and Administrative Procedure Act claims.
Orrick concluded that several challenged conditions appeared disconnected from the purposes Congress established for the grants. For example, federal money intended for law-enforcement training or disaster preparedness could not simply be conditioned on unrelated policy objectives without adequate congressional authorization.
The judge wrote that imposing the challenged conditions would also threaten the plaintiffs’ ability to provide critical services and could harm public safety.
Court Finds Problems With Anti-DEI Requirements
The DEI provisions received particular attention.
The court found that some of the conditions conflicted with or went beyond existing federal anti-discrimination requirements. The ruling also noted that Congress has expressly included diversity-related considerations in some federal programs.
For example, federal law governing certain community-policing grants refers to efforts to recruit women and members of racial and ethnic minority groups into sworn law-enforcement positions. That made a broad anti-DEI condition particularly difficult to reconcile with congressional policy in some programs.
The court also found problems with provisions requiring recipients to comply generally with presidential executive orders related to federal grants.
Why Were the Conditions Considered Too Vague?
Another important issue was whether grant recipients could determine exactly what they were required to do.
The executive-order condition required recipients to comply with presidential orders related to grants without clearly identifying every applicable order or explaining how those orders applied to local governments.
Orrick concluded that the municipalities were likely to succeed in arguing that these requirements failed to provide the clear notice required when the federal government attaches conditions to funding.
The potential consequences made the uncertainty especially important because violations could result in suspension or termination of funding and potentially create other legal exposure.
What Does the Preliminary Injunction Do?
The injunction prevents the federal agencies from imposing or enforcing the challenged conditions against the 11 plaintiffs for covered grants they receive, have applied for or intend to seek.
The government also cannot require the municipalities to certify compliance with those conditions or refuse to process grants because the local governments participated in the lawsuit.
Actions already taken to withhold or delay covered funding because of the challenged provisions must be treated as ineffective while the injunction remains in force.
The order is targeted to the plaintiffs rather than automatically invalidating the conditions nationwide.
Where Does the California–Oregon Grant Lawsuit Stand Now?
As of August 2026, City of Fresno v. Mullin remains pending. The July ruling is a preliminary injunction, not a final judgment declaring every challenged policy permanently unlawful.
Federal grant documents issued after the ruling acknowledge that certain disputed conditions do not apply to the protected plaintiffs while Orrick’s injunction remains effective.
The case is significant because it addresses how far a presidential administration can go in using federal grants to influence state and local policies. The eventual ruling could further define the boundary between an executive agency’s authority to administer grants and Congress’s constitutional control over federal spending.