On August 25, 2026, the U.S. Court of Appeals for the Ninth Circuit issued a consequential opinion on the enforceability of “materiality conditions” in government contracts. The Ninth Circuit found that the U.S. Departments of Transportation (DOT) and Housing and Urban Development (HUD) likely stepped beyond their statutory authority by requiring grant recipients to certify, after the point of award, that compliance with certain laws was “material” to the agencies’ payment decisions, for purposes of False Claims Act (FCA) liability. While limited to the laws at issue, the opinion is significant in recognizing that the Government cannot lower its burden of proving FCA materiality through post hoc certifications imposed on government contractors.

Background

County of King v. Turner involved grants awarded by DOT and HUD to 31 cities, counties, and local agencies. In early 2025, after the grants had either been received or conditionally awarded, the agencies imposed a number of new conditions on the recipients, including a requirement that they certify that their “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)].” See County of King v. Turner, ___ F.4th ____, 2026 WL 2489361, at *4 (9th Cir. 2026) (alteration in original).

The grant recipients filed a lawsuit arguing that DOT and HUD lacked statutory authority under the Administrative Procedure Act (APA) to impose the new conditions. A lower court granted a preliminary injunction preventing the agencies from enforcing the conditions or withholding the recipients’ grant funding. This decision was based in part on the court’s finding that the recipients were likely to succeed on their argument that the conditions were unlawful under the APA. The Ninth Circuit affirmed that holding.

The FCA Conditions

The Ninth Circuit found that HUD and DOT could not condition grant funding on the recipients’ certification that their compliance with federal anti-discrimination laws was “material to the U.S. Government’s decisions” for purposes of FCA liability (the FCA Conditions). The Court identified several bases for this determination.

First, the Ninth Circuit rejected the Government’s argument that Title VI, which prohibits discrimination in federal assistance programs such as the grants at issue, provided a statutory basis to impose the FCA Conditions. The Court explained that a certification of materiality related to a completely different statutory regime—namely, the FCA, rather than Title VI. Further, through the FCA Conditions the Government demanded a certification of compliance with all antidiscrimination laws, rather than tethering the condition to the DOT and HUD grants received by the plaintiffs. The Court found that Title VI did not contemplate conditioning federal financial assistance on such a broad certification of compliance.

Second, the Court found that the FCA Conditions were “in tension with the FCA itself.” County of King, 2026 WL 2489361, at *8. The Court explained that the FCA already defines materiality as “requir[ing] an objective inquiry into what has a ‘tendency to influence’ the government, not what the government ‘deem[s]’ important.” Id. (citation omitted). This inquiry is “for the courts,” which “apply the definition to the facts of a particular case.” Id. The FCA Conditions represented an attempted “end run” around that objective inquiry by forcing recipients of government funds to agree, after the fact, that their compliance with specific statutory and regulatory rules was material to the payment decision. Id.

The Court also suggested that such FCA Conditions violate the Supreme Court’s directive in Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024), the landmark opinion holding that courts, and not agencies, interpret the law. Specifically, the Court noted that the FCA does not delegate to agencies the authority to define what is and is not material, meaning DOT and HUD could not make such a determination without exceeding their statutory authority. Id.

Key Takeaways

On its face, County of King v. Turner limits only the enforcement of a specific set of conditions imposed on a limited number of grant recipients. However, because the Court’s analysis did not depend on the specific powers granted to HUD or DOT, or the nature of the grants at issue, the Ninth Circuit’s analysis may have broader implications for so-called ex ante FCA “materiality conditions” in government contracts.

The majority opinion also specifically disagreed with the Government on its claim—reiterated by the dissent—that a “materiality condition” is “no big deal” because it amounts to notice to prospective recipients of federal funds that a specific factor is material. County of King, 2026 WL 2489361, at *17. The majority reasoned that when the Government enters FCA litigation with a signed materiality condition from the defendant, then the Government must do less work to establish materiality for purposes of FCA liability than it would otherwise. As the Ninth Circuit explained, “[t]hat sure sounds like a ‘big deal’” and is impermissible under the FCA. Id. at *8.

If you have questions about how the Ninth Circuit’s decision impacts your organization, contact Abraham Souza, Tanner Cook, Sydney Sznajder, or your Husch Blackwell attorney.