Lawsuit Pauses PRWORA Changes

August 7, 2025

The federal government has agreed to delay enforcement of recent reinterpretations of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) by several federal agencies until September 10, 2025.  

PRWORA is a federal statute that restricts non-citizen eligibility for many federal public benefit programs to only “qualified aliens”. As detailed in CAPLAW’s News Flash Initial Reactions to HHS Notice Interpreting PRWORA and “Federal Public Benefit”, the Department of Health and Human Services (HHS) released a notice on July 14, 2025 that reinterpreted PRWORA to cover many Community Action Agency (CAA) programs, including CSBG and Head Start, and was intended to take effect immediately. Additional notices on the interpretation and application of PRWORA were released in the same week by the Department of Education, Department of Labor, and Department of Justice.

Following the release of these notices, twenty-one state attorneys general sued HHS and other government officials and agencies in Rhode Island federal court on July 21, 2025. A few days later, as a part of that case, the government agreed to "stay enforcement and application” of the notices originally until September 3 and then later until September 10, 2025. This means that the federal government will not enforce the challenged notices interpreting PRWORA by HHS and the Departments of Education, Justice, and Labor in the following states until that date: Arizona, California, Colorado, Connecticut, the District of Columbia, Hawai’i, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Mexico, New Jersey, New York, Oregon, Rhode Island, Vermont, Washington, and Wisconsin. Argument in the case is currently proposed for August 20, 2025.

While the stipulation technically does not apply to states who are not party to the lawsuit, it is CAPLAW’s understanding that federal agencies are indicating to grantees that the delay in enforcement applies nationwide. We anticipate that federal funders will issue guidance on how CAAs should implement the requirements of PRWORA. CAAs should wait for that guidance before taking further action. CAPLAW will continue to monitor and provide information regarding PRWORA to CAAs as it becomes relevant.

New Guidance on DEI from DOJ

August 7, 2025

On July 29, 2025, the U.S. Attorney General released a non-binding memorandum to all federal agencies to explain the practical implications of this administration’s priorities relating to diversity, equity and inclusion initiatives: Guidance for Recipients of Federal Funding Regarding Unlawful Discrimination (the “Memo”). The Memo does not establish any new requirements for Community Action Agencies (CAAs); rather, it provides insight into the federal government’s understanding and interpretation of existing antidiscrimination law.

Similarly to recent technical assistance from the EEOC and a Dear Colleague Letter from the Department of Education, the Memo reflects an interpretation of existing law rather than the creation of new law. The Memo directly addresses statutes such as Title VI and Title VII of the Civil Rights Act of 1964, case law from federal appeals courts and the U.S. Supreme Court, and the constitutional protections of the Equal Protection Clause of the 14th Amendment. While the Memo is directed to federal agencies, it shows recipients and subrecipients of federal funds how a federal agency may apply the antidiscrimination legal framework in both the programmatic and employment contexts.

The Memo restates many longstanding principles of federal law, such as that discrimination or preference on the basis of protected characteristics (e.g., race, sex, color, national origin, religion) is unlawful and retaliation against an individual for opposing actions they reasonably believe violate antidiscrimination laws is prohibited. The Memo provides examples and suggested best practices to confirm or clarify what activities this administration believes could constitute a violation of federal antidiscrimination law. Although many of the examples describe activities occurring in a higher education setting and are not directly applicable to CAAs, these examples can still provide CAAs with a framework within which to assess their own comparable activities (e.g., hiring practices, providing benefits to individuals with low incomes, etc.)

The Memo includes a few key highlights for CAAs:

• Recognition that “financial hardship” is a “universally applicable criteria” that can be applied without implicating protected characteristics.
   
• Emphasis on the established legal concept that using facially allowable criteria to mask decision-making based on a protected characteristic could implicate federal antidiscrimination laws, which the Memo calls “proxy discrimination”.
   
• Indication that this administration is viewing federal antidiscrimination law through the lens of recent case law focused on universities. The practical effect of this is that federal agencies may apply the legal tests used by courts in those recent cases in assessing whether federal funding statutes that base the provision of services on a protected characteristic align with federal antidiscrimination laws.

The mandate of the CSBG Act, 42 USC §§ 9901-26, and other federal funding sources that CAAs receive has always, and continues to, focus on addressing poverty and serving those with low incomes in a CAA’s service area. These funding sources base the provision of services and assessment of need on non-protected characteristics. Ensuring that eligibility determinations are based on an individual’s income level and tailoring services to the needs of those who fall within that income level is supported by the CSBG Act and federal antidiscrimination law.