Federal Updates
Week of 10/12/26
Hi all,
Our colleagues at Manatt Health Strategies are providing weekly updates on federal developments, and we are sharing those with our CT BOS email lists. Please see Friday’s full update below. Here’s a quick Updated on the CoC Lawsuit:
As we have reported previously, NAEH and the plaintiff states (including Connecticut) are no longer asking the court to throw out the whole NOFO. Instead, they are asking it to strike the challenged provisions and leave the rest in place (i.e., HUD would make Tier 1 awards by 12/1/26 from the applications already submitted and open a new application period for Tier 2 without the set-aside).
What’s next: The judge is expected to rule in the coming days or weeks. The applications submitted on September 30 stand, and HUD can keep reviewing them under the current NOFO unless the court orders otherwise. Lawmakers are expected to continue negotiating the fiscal year (FY) 2027 budget through the “lame duck” session of Congress in November and December. The full year appropriations process provides another window of opportunity for safeguarding CoC funding.
We will share updates as soon as we have them.
Sincerely,
CT BOS Team
[Week of 10/12] Weekly Update: HUD FY 2026 CoC NOFO Impacts
The weekly update provides the latest on the federal actions from HUD, the White House, and the United States Department of Justice related to the HUD Continuum of Care (CoC) Program, including Executive Orders (EO), rulemaking announcements, litigation, policy memos, guidance, funding solicitations and other policy action tailored to the specific information needs and requests of Connecticut’s homelessness services system.
HUD Actions
Re-Opened FY 2026 NOFO: On Friday, September 18, 2026, HUD reissued its FY26 CoC NOFO to accept applications with a new deadline of September 30, 2026 at 8:00PM ET. The NOFO is unchanged except for the new deadline and a technical correction to reduce the 15-day notification requirement for CoCs to notify project applicants to 7 days.
Waiver for Nonprofits to Administer Rental Assistance for FY 2026 NOFO: On Friday, September 18, HUD additionally published a waiver of 24 CFR 578.51(b) to permit provide nonprofit applicants recipients, and subrecipients of funds awarded under the FY 2026 CoC NOFO to administer rental assistance.
New Guidance on Direct-to-HUD Project Applications and Extension of NOFO Deadline for LAHSA: On Tuesday, September 22, HUD granted an extension of the FY 2026 NOFO application deadline to Los Angeles City and County CoC (CA-600) and its formerly designated Collaborative Applicant, LAHSA pending the appeals court ruling on LAHSA’s suspension. HUD has extended the application deadline to October 14, 2026 for CA-600 applications only.
Notice and Request for Public Comment: On Thursday, September 10, HUD released a notice of research that compiles literature and stakeholder feedback in support of shifting CoC funding priorities toward transitional housing, supportive services, recovery-oriented housing, service engagement requirements, and public safety partnerships. The notice “invites public comment on these proposed activities before incenting communities to adopt them as part of their CoC funding applications.” This notice appears to be a direct response to the District Court of Rhode Island’s invalidation of HUD’s FY 2026 CoC NOFO on the grounds that HUD failed to provide public notice and comment prior to creating incentives for programs that are not statutorily identified as best practices. Comments may be submitted by October 13, 2026 to https://www.regulations.gov/.
HUD Office of Inspector General Ongoing Investigations
Link to Ongoing Investigations – This page provides some information about where HUD OIG is conducting investigations related to CoC funding and mentions grantees in Washington State, California, and Colorado.
Latest on Litigation
FY 2026 NOFO Litigation
As a reminder: In July 2026, both the National Alliance to End Homelessness (Alliance) and a group of States led by Washington State, filed suit in federal district court in Rhode Island challenging the FY 2026 Continuum of Care (CoC) Notice of Funding Opportunity (NOFO) on several grounds.
On September 30, the Alliance and the States filed a motion for summary judgment and asked the court to require HUD to make lawful Tier 1 awards by December and recompete Tier 2 awards without the challenged provisions. Alternatively, they asked the court to halt all awards until summary judgment is decided.
On October 5, 2026, the Alliance and HUD submitted for the record a stipulation in which they agreed that the Alliance will not file a motion for a preliminary injunction immediately and HUD will provide 2-week-notice if it issues awards before 12/1.
On October 7, 2026, HUD filed its cross-motion for summary judgment asking the court to uphold the FY 2026 CoC NOFO repeating its argument that it lawfully used its broad statutory authority to shift the CoC program toward Supportive Services and Transitional Housing.
Links to the District Court dockets are here:
[NEW!] Latest Update: On Wednesday, October 14th, the Alliance and the States filed a response to HUD’s cross motion reiterating their claims. On Thursday, October 15th, the court provided additional time until October 21 for HUD to file a motion in reply to the Alliance and the States preceding motion. On Friday, October 16, HUD waived their right to reply.
The court is expected to rule in the coming days or weeks.
LAHSA Lawsuit
As a reminder: On June 29, 2026, LAHSA sued HUD after HUD notified the agency of its intent to suspend federal CoC funding for lack of financial management and controls, seeking an injunction preventing any disruption in federal resources. On July 16, HUD sent to its CoC distribution list a “Notice of Intent to Modify the FY 2026 CoC NOFO” to include a direct-to-HUD application process for eligible applicants in geographic areas where HUD has determined that a CoC does not meet the requirements of the CoC program.
On August 13, the court issued a preliminary injunction, finding that HUD’s suspension of LAHSA was unlawful under the APA. The preliminary injunction restored LAHSA’s role for the FY 2026 CoC funding cycle and required HUD to make approximately $241 million in FY 2026 funding available.
On August 31, the LA CoC (having been granted permission to intervene in the case) filed an amended complaint against HUD as part of the same lawsuit. Like the original LAHSA complaint, the LA CoC amended complaint alleges that HUD’s suspension of LAHSA was unlawful under the APA.
Latest Update: On September 24, 2026, the U.S. Court of Appeals for the Ninth Circuit denied in large part HUD’s request for a stay of the preliminary injunction in nearly all respects. The Ninth Circuit order requires HUD to reinstate LAHSA, execute signed agreements on approved grants to LA CoC for FY2025 that it had not signed because of LAHSA’s agreement, and proceed with distributing FY2026 funds in accordance with the 2026 Appropriations Act. It clarifies, however, that HUD does not need to disburse the $241M to LAHSA immediately. The Court will hold oral argument on the appeal of the preliminary injunction on October 19, 2026 at 1:00 p.m.
King County v. Turner
On August 25, 2026 the 9th Circuit Court of Appeals ruled in favor of King County and over 70 local governments in the King County v. Turner case, upholding the existing court order barring the Trump administration from requiring CoCs to certify compliance with various policies (with one exception – see below), prohibiting the use of CoC funds for “promoting gender ideology” or “subsidizing illegal immigration,” and requiring CoCs to verify immigration status using the Systematic Alien Verification for Entitlements (SAVE) system. Like the district court, the Court of Appeals concluded that HUD lacked authority to impose these conditions on the CoC program.
The 9th Circuit ruled that HUD can condition CoC funds on a certification that the applicant/recipient will comply with federal nondiscrimination requirements as to activities funded under the CoC grant but cannot require a certification that the applicant/recipient complies with nondiscrimination requirements as to other programming outside CoC-funded activities.
Note that this ruling applies only to the state and local governments participating in the lawsuit (listed here) and only to the specific HUD and Department of Transportation (DOT) grant programs at issue in the lawsuit (including CoC). However, the decision establishes binding precedent within the 9th Circuit, meaning other entities in the circuit may bring similar challenges to these grant programs and cite this precedent. (The 9th Circuit includes the following states: AK, AZ, CA, HI, ID, MT, NV, OR, and WA). This decision does not control in other states but may nonetheless inform court decisions. In addition, whether the ruling extends to other federal grant programs (in or outside the 9th Circuit) will require a program-by-program analysis of the plausible statutory authority for any of the new conditions.
The administration is expected to appeal this ruling, given that similar conditions have been incorporated across numerous federal grant programs and reflected in the Office of Management and Budget’s (OMB) proposed revisions to the Uniform Guidance.
State of New York v. U.S. Department of Justice
Link to docket is here:
New York v. U.S. Department of Justice
The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (“PRWORA”) prohibits certain categories of noncitizens from receiving certain types of federal, state, or local public benefits, although many types of CoC services were historically exempt from PRWORA’s eligibility restrictions and verification requirements. However, beginning July 2025, the Trump Administration significantly expanded PRWORA’s eligibility restrictions through updated guidance from HUD and the Department of Justice (DOJ), among other agencies. The plaintiffs—twenty states and the District of Columbia—challenged these new interpretations of PRWORA as unlawful.
On September 10, 2025, the court issued a preliminary injunction blocking the policy updates from taking effect in plaintiff states.
Latest Update: On September 21, 2026 the U.S. District Court in Rhode Island granted the plaintiffs’ motion for summary judgment, vacating all agency PRWORA notices (“Notices”). Importantly, this court order prevents the Administration from enforcing these PRWORA notices nationwide, not just in the plaintiff states participating in the lawsuit.
Congressional Activity
As a reminder: On Saturday, August 8, the Senate passed its continuing resolution (CR) in 90-6 vote to fund federal agencies, delay the Office of Management and Budget (OMB) proposed rule, and provide a clean extension of surface transportation reauthorization through December 11, 2026. The Senate bill included language to ensure Immigration and Customs Enforcement (ICE) and Customs and Border Protection (CBP) does not get any new funding during the extension. The White House issued a statement of administration policy in support of the Senate’s funding bill.
On Tuesday, September 1st, the House passed the Senate continuing resolution (CR) (H.R.6500) in a 370-48 vote under suspension of the rules. The CR extends current funding for federal agencies, delays the implementation of the Office of Management and Budget’s (OMB) proposed rule, and provides a clean extension of surface transportation reauthorization through December 11, 2026.
Congress is in recess until after the election. Lawmakers are expected to continue negotiating fiscal year (FY) 2027 appropriations bills through the “lame duck” session of Congress in November and December. The full year appropriations process provides another window of opportunity for safeguarding CoC funding.
Information from Advocacy Partners
No major updates.
In Case You Missed: National Alliance to End Homelessness: Protecting Homeless Assistance Funding in FY27
The Alliance previously released a two pager outlining how federal funding uncertainty affects the nation’s homelessness response system and their priorities for Congressional action.